HSBC India Business Outlook Survey October 2026
Indian private sector firms demonstrated significantly improved business confidence in October 2026, with the headline HSBC India business activity net balance rising from +22% in June to +34%. This places India as the second most optimistic among the 12 nations monitored, behind only the UK (+35%). The survey, conducted between 9-28 October 2026, covered approximately 800 companies across manufacturing and services sectors, with manufacturers reporting a net balance of +30% and service providers at +36%.
Profit expectations surged to a two-year high, with the net balance doubling from +15% in June to +30%, representing the highest figure among major emerging markets and developed nations tracked by the survey. Hiring intentions strengthened considerably, with the employment net balance rising from +10% to +17%, indicating brighter output and profit projections supporting workforce expansion. Investment intentions showed divergence with capex sentiment weakening to a one-year low (net balance falling from +19% to +15%) while R&D optimism reached a six-year high (net balance rising marginally from +12% to +13%).
The improved sentiment was underpinned by forecasts of stronger demand from both existing and new clients, including customer retention, repeat orders, and growing demand for services. Companies cited expansion into new markets, new product launches, and demand for specialized and customized products as key drivers. Additional support came from industrial and manufacturing growth, new infrastructure and construction projects, automation, technology adoption, and digital engagement initiatives.
Despite the positive outlook, Indian businesses identified several headwinds including raw material cost increases, market competition, changing customer preferences, labor cost issues, regulatory and technological changes, delayed customer payments, project delays, storage and logistics challenges, and power supply issues.
Cost pressure expectations intensified significantly, with non-staff cost inflation expectations climbing to +20% in October from +9% in June, representing the highest level since February 2022. Staff cost inflation expectations also rose from +12% to +17%, consistent with stronger hiring plans. However, output price expectations remained unchanged at +15%, suggesting firms expect intense competition to continue limiting pricing power.