The manufacturing purchasing managers' index in India declined from 56.6 in November to 55.0 in December, indicating the least significant improvement in the sector's health in two years.
The manufacturing purchasing managers' index (PMI) in India dropped from 56.6 in November to 55.0 in December, indicating the least significant improvement in the sector's health in the previous two years. The decrease was caused by slower growth in sales and output, with new export orders increasing at their slowest rate in 14 months and optimism about output prospects falling to its lowest point since October 2022.
An increase in activity is indicated by a reading above 50 on the PMI, which is calculated by S&P Global and published by HSBC. Additionally, the December measurement was higher than its long-term average of 54.2.
The manufacturing PMI is a vital, early indicator of general economic trends and future growth for companies, investors, and policymakers. It shows the health of the manufacturing sector by indicating expansion, contraction, or stagnation in areas like new orders, production, employment, and inventories.
India's manufacturing sector saw another wave of remarkable growth despite the PMI's month-over-month decline, with total new orders and output growing at above-trend rates once more, albeit more slowly than previously, according to the poll.
In 2025, the Indian economy faced a number of difficulties. The US tariff issue caused market volatility for nine months. Despite these difficulties, India's exports increased by 5.43% between April and November, and its GDP grew by 8.2% in Q2 FY26 and 8% in H1 FY26. According to index of industrial production (IIP) data available through November, manufacturing also did well.
"Loss of momentum for growth"
According to the PMI survey, "a loss of growth momentum across several measures tracked by the HSBC India Manufacturing PMI survey was characterized by the end of the 2025 calendar year." Sharp growth in new business intakes and output were still supported by positive demand trends, but rates of expansion slowed due to pressure from competitors and muted sales of some products. The most recent increase in purchasing levels was the least significant in two years, and employment increased at the slowest rate during the current 22-month period of job creation.
Indian manufacturers anticipate more output in 2026 compared to current levels despite the slowdown in growth, but overall sentiment has declined to its lowest point in almost three and a half years, according to the study.
"The latest PMI points to a measured deceleration rather than any loss of underlying strength in Indian manufacturing," stated Rishi Shah, partner and head of economic consulting services at Grant Thornton Bharat. At a time when the global environment is growing more unpredictable, domestic demand is still strong and cost pressures are very mild. India's growth impetus is becoming more inward-looking as export growth slows due to weaker external momentum, which should assist the industry manage global volatility in the near future.
Indirect tax revenue increased 6.1% year over year to ₹1.74 trillion in December, despite the government's move to lower GST rates in September.
"Well-maintained"
"Even with growth momentum easing, India's manufacturing industry wrapped up 2025 in good shape," stated Pollyanna De Lima, associate director of economics at S&P Global Market Intelligence. As we approach the last fiscal quarter, businesses should be busy due to the significant increase in new business intakes, and the absence of significant inflationary pressures may continue to boost demand.
"New export orders have been steadily increasing at a slower rate. In actuality, the percentage of businesses indicating increased overseas sales in December was around half of the 2025 average. Anecdotal evidence from the poll has also shown a smaller variety of export destinations, with commodities primarily going to Asia, Europe, and the Middle East. Many Indian manufacturers would be expecting that competitive pricing will help attract new business from other regions in the upcoming year, as they are not as severely impacted by cost pressures as manufacturers elsewhere, she continued.
The poll revealed that while new product introductions, advertising, and favorable demand trends were viewed as tailwinds, several businesses were worried about market instability and competition pressures.
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