India’s Manufacturing Shows Strong Growth in October

India’s manufacturing sector recorded a notable uptick in October, signaling robust industrial activity as domestic demand strengthens and cost pressures ease, according to the latest HSBC Flash India Manufacturing Purchasing Managers’ Index (PMI).

The PMI climbed to 58.4 in October, up from 57.7 in September, marking a two-month high and highlighting ongoing expansion across the sector. Compiled by S&P Global, the data reflects rising production, higher new orders, and steady employment levels, underscoring the resilience of India’s manufacturing ecosystem despite external headwinds.

---

Domestic Stimulus and Cost Controls Support Growth

HSBC’s Chief India Economist, Pranjul Bhandari, noted that recent Goods and Services Tax (GST) rate cuts have bolstered domestic demand while keeping input costs manageable. “The slight pickup in the manufacturing PMI is largely driven by supportive policies that have strengthened consumption and production alike,” Bhandari said, emphasizing that new orders and output continue to exceed the average observed between January and July.

This rebound points to sustained confidence among domestic businesses and consumers, providing a buffer against global uncertainties, including fluctuating commodity prices and logistics disruptions.

---

Export Challenges Persist Amid U.S. Tariffs

While domestic activity has gained momentum, export growth remains constrained due to U.S. tariffs. Bhandari explained that these trade barriers have moderated new export orders and tempered future business sentiment. “Despite strong domestic demand, international headwinds continue to limit optimism for export-oriented production,” she added.

The findings suggest that while India’s internal market is driving momentum, global trade frictions could affect the country’s manufacturing competitiveness abroad.

---

Composite Output Reflects Steady Economic Expansion

The HSBC Flash India Composite Output Index, which tracks both manufacturing and services, slipped slightly to 59.9 in October from 61.0 in September. Although down from the previous month, the reading remains well above the neutral 50 threshold, signaling ongoing overall economic growth. Analysts interpret this as an indication that India’s broader economy is maintaining momentum heading into the final quarter of 2025, albeit at a moderated pace compared to earlier months.

---

Expert Insights and Outlook

Economists suggest that India’s industrial recovery demonstrates the strength of domestic consumption as a driver of growth, particularly in the context of policy interventions like GST adjustments and infrastructure investments. However, the persistent drag from international trade tensions highlights the need for exporters to diversify markets and improve competitiveness.

“Domestic demand is carrying the sector forward, but export-oriented manufacturers may need strategic support to navigate geopolitical and tariff-related challenges,” said Rohit Kumar, Senior Economist at ICRA, emphasizing the mixed picture for India’s industrial landscape.