India’s manufacturing sector lost momentum in March 2026, with activity slowing to its weakest pace in nearly four years. The decline was linked to higher input costs, weaker order growth, tighter competition, and the impact of the war in West Asia on demand and supply conditions. The latest Purchasing Managers’ Index showed that expansion continued, but at a much slower rate than in the previous month.
PMI Reading and Significance
The HSBC India Manufacturing Purchasing Managers’ Index fell to 53.9 in March 2026 from 56.9 in February. This was the lowest level since June 2022. A PMI reading above 50 indicates expansion in manufacturing activity, while a reading below 50 signals contraction. The index tracks new orders, output, employment, supplier delivery times, and stocks of purchases.
Slower Growth in Orders and Output
The two major components of the index, new orders and output, rose at the slowest pace since mid-2022. Firms reported that market uncertainty, cost pressures, and the West Asia conflict affected business conditions. Growth in production and fresh orders remained positive, but the pace weakened sharply compared with earlier months.
Rising Input Costs
Input prices increased at the fastest pace in more than three and a half years. Prices of aluminium, chemicals, fuel, jute, leather, fabric, oil, rubber, and steel rose during the month. Cost pressures were the steepest since August 2022. Many firms appeared to absorb part of these higher costs, which kept output prices relatively contained.
Export Demand Remains Strong
Despite the slowdown, Indian manufacturers recorded their strongest rise in external sales since September 2025. Demand improved from several markets, including Australia, Brazil, Canada, mainland China, Europe, Japan, West Asia, Türkiye, and Vietnam. This helped offset some of the weakness in domestic conditions and provided support to overall manufacturing growth.
Last Modified: April 28, 2026