PMI data: In April, India's manufacturing growth reaches a 10-month high.

According to a private poll published on Friday, robust demand and a dramatic increase in output in April caused India's manufacturing sector to grow at its quickest rate in ten months.

S&P Global's HSBC India Manufacturing Purchasing Managers' Index (PMI) increased from 58.1 in March and 56.3 in February to 58.2 in April. In January, the index was 57.7, and in December, it was 56.4. Expansion is indicated by a reading above 50, and contraction is indicated by a reading below 50.

"Growth momentum in the Indian manufacturing industry improved in April, with output increasing at the fastest pace since June 2024 on the back of another strong expansion in order books," according to the study. "The second-fastest increase in foreign orders since March 2011 helped to support total sales. Significant increases in employment and purchasing activities coincided with this encouraging trend," it continued. The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index indicated the most increase in the sector’s health in ten months, while only slightly increasing from 58.1 in March to 58.2 in April.

According to Pranjul Bhandari, chief India economist at HSBC, "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."

"Due to strong orders, manufacturing production growth increased to a 10-month high. Although input costs rose a little more quickly, the impact on margins might be more than offset by the output prices' far faster growth, which caused the index to soar to its highest level since October 2013, she continued. After slowing down in September, India's economic growth picked up speed in the December quarter, but it was still slower than it was in the previous fiscal year. With the exception of Q2 FY25's revised estimate of 5.6%, GDP expanded 6.2% in Q3 FY25, the slowest since Q4 FY23. The GDP is expected to expand by 6.5% in FY25, according to the National Statistics Office (NSO). According to a haphazard calculation, growth must reach 7.6% in the year's last quarter in order to match the NSO's second advanced forecast.

However, as the US tariff war causes alarm around the world, the International Monetary Fund (IMF) has slashed its global trade outlook and lowered its growth prediction for India for the fiscal year to 6.2%. The IMF reaffirmed its October 2024 forecast of 6.5% growth for India in FY25 in January. The most recent revision follows similar reductions made by S&P Global, Moody's Analytics, and the Asian Development Bank (ADB). Q3 FY25 saw a 3.5% increase in manufacturing production, up from 2.1% the previous quarter, but still far less than the 14% and 7.5% growth in Q4 FY24 and Q1 FY25, respectively. This slow growth hindered the expansion of the GDP as a whole.

According to the most recent manufacturing PMI survey, output growth was primarily driven by a substantial increase in new enterprises, which was fueled by higher local and international demand. The expansion rate, which was mostly unchanged from March, was the second-strongest in nine months.

"Strong optimism regarding output prospects over the coming year was evident in the April data, driven by expectations of demand strength," said the report. "Marketing efforts, efficiency gains and new client enquiries also underpinned positive forecasts," it stated.