India’s manufacturing sector gained strong momentum in July 2025, with the HSBC India Manufacturing Purchasing Managers’ Index (PMI) rising to a 16-month high of 59.1, up from 58.4 in June, according to data from S&P Global. The growth was primarily driven by a sharp surge in factory orders, the fastest in nearly five years, along with robust output expansion, particularly in intermediate goods. However, the optimism was tempered by business sentiment, which dipped to a three-year low amid rising competition and inflation concerns.
Despite subdued hiring, the manufacturing outlook remained positive, supported by moderate input cost inflation and improved pricing power. While input costs rose slightly due to higher prices for aluminium, rubber, and steel, companies increased selling prices at a faster pace, supported by strong demand. Inventory trends also indicated restocking of inputs and a drawdown in finished goods, reflecting healthy sales. Overall, while India’s manufacturing sector enters the second half of 2025 on a strong footing, inflationary and competitive pressures may pose headwinds to sustained growth.
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