India’s Manufacturing Sector Activity Falls To 2-Year Low In December: PMI
In December, India’s manufacturing sector experienced its weakest growth in two years, with new orders expanding at a slower rate, leading to reduced input purchases and job creation, according to a recent survey.
The HSBC India Manufacturing Purchasing Managers’ Index (PMI), a key indicator of sector performance, dropped from 56.6 in November to 55 in December, signaling a decline in growth momentum.
A PMI score above 50 indicates expansion, while a score below 50 signifies contraction.
Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, mentioned, “Even with growth slowing down, India’s manufacturing industry ended 2025 on a positive note. The substantial increase in new business orders is expected to keep companies busy in the final fiscal quarter, supported by minimal inflationary pressures.”
However, the end of the year saw a decrease in growth momentum across various metrics tracked by the HSBC India Manufacturing PMI survey. Production growth hit a 38-month low, accompanied by the weakest rise in new orders in two years.
International orders also saw a softer increase, with new export orders rising at the slowest pace in 14 months. The survey highlighted improved demand from clients in Asia, Europe, and the Middle East.
Companies responded to the slower growth in new business by reducing input purchases. Despite a lack of pressure on operating capacity, factory employment saw only marginal growth in December.
According to the survey, the rate of job creation was at its lowest since the period of growth began in March 2024.
On the pricing front, input costs rose at a historically low rate, with charge inflation easing to a nine-month low.
Looking ahead, Indian manufacturers anticipate an increase in output in 2026 compared to current levels, although overall sentiment levels have dropped to their lowest in almost three and a half years.
While positive demand trends and new product releases are seen as positive factors, some firms express concerns about competitive pressures and market uncertainty.
“With Indian manufacturers facing lower cost pressures compared to others, many are hoping that competitive pricing strategies will attract new business from other regions in the upcoming year,” Lima added.
The HSBC India Manufacturing PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 purchasing managers.
