HSBC India Manufacturing PMI®
India's manufacturing sector showed a significant recovery in growth momentum during September 2026, with the seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) rising by more than two index points from 52.8 in August to 55.1. This reading signals the strongest improvement in the health of the sector for seven months, although the average for the second fiscal quarter stood at 53.8, its lowest since the same period in 2021.
The improvement was driven by stronger demand conditions, with new orders rising at the fastest rate since February. Firms reported that firmer demand for electronic, food, pharmaceutical, and textile products drove a sharper increase in new business intakes. New export orders also expanded at a quicker pace, with panel members particularly noting greater demand from clients in Brazil, Europe, the UAE, and the US.
This pick-up in demand momentum spurred the sharpest expansion in Indian factory production for four months. Intermediate goods was the brightest area of India's manufacturing industry during September, topping the growth rankings for both new orders and output. Capital goods was the weakest link, recording only modest increases that were weaker than in August.
Jobs growth resumed in September following a blip in the previous month, with the pace of expansion in employment being solid and the most pronounced since May. Firms also procured more materials for use in production processes and to add to inventories, with overall buying levels expanding at a quicker pace than in August.
Stocks of purchases continued to expand at the end of the second fiscal quarter, with the pace of accumulation being sharp—the strongest in seven months and well above its long-run average. Finished goods inventories recorded their second-largest increase in nearly 12 years, signaling a clear shift from leaner stock levels as companies prepared for anticipated sales.
Indian manufacturers upgraded their output forecasts in September, with the overall level of positive sentiment rising to a four-month high. Optimism was underpinned by new enquiries in the pipeline and expectations that demand conditions will remain favorable.
On the price front, higher prices for electronic components, pharmaceutical items, and steel pushed up overall cost burdens in September. The rate of input cost inflation accelerated from August but remained below its long-run average. Selling prices also increased at a quicker pace that was nevertheless modest and below trend. Cost pressures were most intense in the intermediate goods categories and weakest among capital goods producers, while the sharpest upturn in selling charges was registered in the consumer goods segment.