India's Manufacturing Sector Hits Four-Month High: What Does It Mean for the Economy?

In February, India's manufacturing sector experienced significant growth, reaching a PMI of 56.9, the highest in four months. This surge is attributed to improved domestic demand, although new export orders have seen a decline. The report highlights the positive outlook for the sector, with many companies anticipating growth in the coming year. Discover the factors contributing to this expansion and what it means for the Indian economy.

By Narendra Chaudhary Mar 2, 2026, 15:05 IST

Manufacturing Growth in India Surges

New Delhi: The growth of India's manufacturing sector has reached a four-month peak, registering a PMI of 56.9 in February, driven by a notable rise in domestic demand, despite a downturn in new export orders, according to a recent monthly survey.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) increased from 55.4 in January to this new high of 56.9 in February.

In PMI terminology, a score above 50 indicates expansion, while a score below signifies contraction.

"The final manufacturing PMI for India indicates a notable acceleration in activity during February. Output has expanded at an increased pace for the second consecutive month, bolstered by stronger domestic orders," stated Pranjul Bhandari, Chief India Economist at HSBC.

Manufacturers reported that robust demand, effective marketing strategies, and rising client needs contributed to another increase in new business.

"Panel members noted that enhancements in efficiency, solid underlying demand, increased new work intakes, and investments in technology collectively supported production growth," the survey highlighted.

However, there was a decline in new export orders. Companies that did see an increase in external sales reported gains from regions including Asia, Europe, the Middle East, and the US.

"The slowdown in new export orders has been ongoing since mid-2025, which has somewhat limited job creation within the manufacturing sector," Bhandari added.

On the pricing front, cost pressures remained manageable, increasing at a moderate rate similar to January's levels.

With a continued sharp rise in total new orders, manufacturers in India increased their material purchases to support production and build inventories.

In response to the growing workloads, firms enhanced their input purchasing, increased their inventories, and hired additional staff.

Looking ahead, 16% of companies expect growth in output volumes over the next year, while less than 1% foresee a decline.

The outlook appears positive, bolstered by effective marketing and favorable demand conditions, as indicated by the qualitative survey data.

The HSBC India Manufacturing PMI is compiled by S&P Global based on responses from approximately 400 manufacturers.