The growth momentum in India’s manufacturing industry in April was the fastest since June 2024, according to HSBC India Manufacturing Purchasing Managers’ Index (PMI). The sequential index growth, however, was modest.
“The notable increase in new export orders in April may indicate a potential shift in production to India, as businesses adapt to the evolving trade landscape and US tariff announcements,” said Pranjul Bhandari, chief India economist at HSBC.
The manufacturing sector growth was spurred by “more rapid increases in stocks of purchases, employment and production due to strong expansion in order books on the back of US tariff announcements”, the survey revealed.
The seasonally adjusted PMI stood at 58.2 in April against March reading of 58.1.
Robust demand for Indian goods boosted firms’ pricing power, with selling charges hiked to the greatest degree since October 2013.
The high frequency indicator comes close on the heels of goods and service tax (GST) collections in April, which largely represent the transaction values in March , growing a robust 12.6% on year. Analysts attribute the record GST receipts in April partly to increased factory activity ahead of the reciprocal tariffs by the US was to be put in in place. These tariffs have since been put in abeyance till July 7, although a new baseline duty of 10% came into existence in early April.
Total sales were supported by the second fastest upturn in international orders in 14 years, that is, since March 2011. Businesses from all continents are placing more orders for Indian goods, the survey said, leading factories to raise production at a faster pace.
“Input prices increased slightly faster, but the impact on margins could be more than offset by the much-faster rise in output prices, of which the index jumped to the highest level since October 2013.”
The substantial improvement in order book volumes occurred despite a marked increase in prices charged for Indian goods. The overall rate of inflation was the highest seen in 11-and-a-half years. Anecdotal evidence indicated that companies continued to transfer cost increases to clients
Input prices rose at the fastest pace in four months during April, with firms mentioning higher building maintenance, labour, leather, paper, rubber, steel and transportation costs.
That said, the rate of inflation was moderate and below that seen for selling charges, according to the report.
The strength of new order inflows also led to another accumulation of outstanding business. Although slight, the rate of increase was at a 15-month high, it said.
Manufacturers continued to enhance their staffing levels in April to meet growing output requirements. Exactly 9% of survey participants took on extra workers, with a combination of permanent and temporary contracts reportedly being offered.
Purchasing activity rose in tandem with new business growth, and the latest sharp expansion in input buying was also partly attributed to stock-building initiatives.