Author: Aditya Pareek | EQMint | General News

Mumbai, November 4, 2025 — India’s manufacturing sector gained strong momentum in October, buoyed by robust domestic demand and higher production activity, even as export growth moderated, according to the HSBC India’s Manufacturing Purchasing Managers’ Index (PMI) released on Monday.

Compiled by S&P Global, the index rose to 59.2 in October, up from 57.7 in September and higher than the preliminary estimate of 58.4, marking one of the strongest monthly expansions in the past five years. A reading above 50 indicates growth, while below 50 signals contraction.

The survey results suggest that India’s factory output continues to expand steadily, supported by resilient consumer spending, business confidence, and investment in technology, even amid global economic uncertainty and softening export orders.

Output Growth Matches Five-Year High

October’s manufacturing performance matched the joint-strongest pace seen in August 2025, underscoring India’s position as one of the fastest-growing industrial economies globally.

Survey respondents attributed the uptick to strong domestic demand, operational efficiencies, and rising orders from new clients. Many firms reported that improved supply chain conditions and stable raw material availability helped sustain production momentum.

“Robust end-demand fuelled expansions in output, new orders, and job creation. Meanwhile, input prices moderated in October, while average selling prices increased as some manufacturers passed on additional cost burdens to end-consumers,” said Pranjul Bhandari, Chief India Economist at HSBC.

This sustained surge in domestic orders highlights the strength of India’s internal market at a time when global manufacturing remains sluggish due to geopolitical uncertainties, supply chain realignments, and slower consumer spending in advanced economies.

Domestic Demand Offsets Weak Export Growth

While overall production remained robust, the report noted a softening in international sales. New export orders increased at their slowest pace in ten months, suggesting that weaker global demand and logistical challenges may be weighing on India’s outbound shipments.

Nevertheless, manufacturers reported that domestic orders more than compensated for the dip in exports, helping the overall growth trajectory remain strong.

“India’s growth story continues to be powered by its domestic market,” said an economist at a Mumbai-based brokerage. “The country’s consumer base, driven by urban demand and rural recovery, is providing insulation from global headwinds.”

Prices and Inflation Trends: Input Costs Ease, Output Prices Stay High

In encouraging news for policymakers, the PMI survey showed that input cost inflation — the pace at which firms’ input prices increase — eased to an eight-month low. Manufacturers attributed this moderation to stable commodity prices and reduced freight costs.

However, output charge inflation — the rate at which firms increase selling prices — remained at its highest level in nearly 12 years for the second consecutive month.

Companies indicated that while input costs have stabilized, higher freight and labour expenses prompted them to maintain elevated selling prices. Strong consumer demand allowed manufacturers to pass on these costs without affecting sales volumes.

“Even though input costs softened, output prices stayed firm because companies were confident that end-consumers would absorb modest price hikes,” said Bhandari. “This indicates that demand remains resilient, but the inflation pass-through continues.”

Employment Rises for 20th Straight Month

The manufacturing sector continued to generate jobs for the 20th consecutive month in October, although the pace of hiring remained moderate.

Firms increased workforce numbers to manage rising workloads, but hiring growth was broadly similar to the levels seen in September. Many manufacturers said they were cautious about expanding headcount aggressively amid persistent global uncertainty and rising wage pressures.

“We are hiring selectively, especially in areas where automation and production efficiency are critical,” said a senior executive at an auto components manufacturer in Pune. “The focus remains on skill-building rather than just headcount expansion.”

The data points to steady employment growth, reflecting manufacturing’s role as a key job generator within India’s post-pandemic recovery narrative.

Optimism Dips Slightly But Remains Strong

The future output sub-index, which tracks business optimism for the next 12 months, dipped slightly from September’s seven-month high but remained firmly positive.

Manufacturers remain confident about long-term prospects, supported by expectations of continued domestic demand, stable government policy, and infrastructure investments.

“Looking ahead, future business sentiment remains strong due to positive expectations around GST reforms and healthy consumer demand,” said Bhandari. “Manufacturers foresee steady output expansion supported by new investment and technological upgradation.”

Industry experts also attribute sustained optimism to India’s manufacturing reforms under the ‘Make in India’ initiative and continued government support through production-linked incentives (PLI) schemes.

Sectoral Insights: Auto, Machinery, and Consumer Goods Lead

Among manufacturing segments, automobiles, machinery, and consumer goods recorded the highest growth in output and new orders.

Auto manufacturers benefited from festive season demand and increased retail sales, while consumer goods producers reported a steady rise in urban consumption. Capital goods and electronics manufacturers saw stable order inflows, reflecting ongoing investments in industrial capacity expansion and digitization.

“We’ve seen broad-based demand across our product lines, especially in the domestic market,” said an executive from a leading machinery manufacturer. “Supply chain normalization and better credit availability have helped us meet demand efficiently.”

Policy Implications and Economic Outlook

Economists say October’s PMI data bodes well for India’s industrial growth outlook in the second half of FY25.

The acceleration in factory output, coupled with easing input costs, could provide comfort to the Reserve Bank of India (RBI), which has maintained a cautious stance on inflation while supporting growth.

However, persistent output price inflation may keep policymakers alert to potential second-round effects on consumer prices.

“Manufacturing activity remains robust and resilient,” said a Delhi-based economist. “If input costs continue to ease and capacity utilization rises, it could strengthen India’s growth momentum even further.”

India’s industrial production is expected to maintain steady growth through early 2026, supported by rising private investments, a rebound in infrastructure spending, and consumer demand recovery across both rural and urban sectors.

The government’s continued focus on improving logistics efficiency, through initiatives like PM Gati Shakti, and investment in green manufacturing could also enhance productivity and export competitiveness in the long run.

India’s Manufacturing Resilience

The October PMI reading cements India’s position as one of the most resilient manufacturing economies globally. While export demand remains uneven, the country’s strong internal market, steady investment flows, and policy reforms continue to anchor industrial growth.

As the HSBC PMI at 59.2 indicates, India’s manufacturing ecosystem is entering a new phase — characterized by high productivity, expanding employment, and resilient domestic consumption.

With business confidence intact and structural reforms supporting industry, the country’s manufacturing sector looks well-positioned to sustain its growth trajectory into 2026 — reinforcing India’s emergence as a global production powerhouse.

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Disclaimer: This article is based on information available from public sources. It has not been reported by EQMint journalists. EQMint has compiled and presented the content for informational purposes only and does not guarantee its accuracy or completeness. Readers are advised to verify details independently before relying on them.