TheInterviewTimes.com | March 02, 2026 | 08:39 PM IST | New Delhi
India’s manufacturing PMI climbed to 56.9 in February 2026, a four-month high, as exports rose 6.15 percent and industrial output slowed to 4.8 percent in January. Explore the mixed economic signals driving GDP growth.
India’s economy showed resilience amid mixed signals on March 2, 2026, with factory activity accelerating to a four-month high while industrial production cooled sharply. Cumulative exports for April through January in fiscal year 2025-26 reached $720.76 billion, up 6.15 percent year-on-year, highlighting strength in services and key merchandise sectors.
Manufacturing Sector Accelerates
The HSBC India Manufacturing Purchasing Managers’ Index rose to 56.9 in February from 55.4 in January, marking its highest level in four months despite falling short of an initial flash estimate of 57.5.
Output expanded at the quickest pace in four months, fueled by robust domestic demand and new orders growing at their strongest rate since October. Firms reported efficiency gains, technology investments, and solid client needs as key drivers, with employment rising modestly.
However, new export orders increased at their slowest rate in 17 months, continuing a moderation trend from mid-2025 that limited hiring in the sector.
Input cost inflation stayed moderate, unchanged from January, but selling prices rose at the fastest pace in four months as companies passed on higher expenses amid strong demand.
Industrial Production Moderates
The Index of Industrial Production grew 4.8 percent year-on-year in January, down from a revised 7.8 percent in December and below expectations of around 6.5 percent.
Manufacturing, comprising nearly 80 percent of IIP, expanded 4.8 percent, slower than prior months, while mining rose 4.3 percent and electricity 5.1 percent.
Use-based data showed intermediate goods up 6 percent, capital goods 4.3 percent, and consumer durables 6.3 percent, though non-durables contracted 2.7 percent.
This slowdown signals a pause in momentum after December’s surge, potentially reflecting seasonal factors and global headwinds.
Exports Provide Counterbalance
Combined exports, including merchandise and services, climbed 6.15 percent to $720.76 billion in April-January FY26, with services up 10.57 percent to $354.13 billion.
Merchandise exports grew 2.20 percent to $366.63 billion, led by engineering goods, electronics, pharmaceuticals, and automobiles. Electronics stood out as a top performer, with shipments hitting $31 billion in April-November FY26, up 38 percent, driven by smartphones.
January alone saw total exports at $80.45 billion, up 13.17 percent.
Broader Economic Resilience
India’s GDP expanded 7.8 percent in the October-December quarter of FY26, supported by a 13.3 percent manufacturing surge, with full-year growth projected at 7.6 percent under the new 2022-23 base year series.
Over the past three years, India finalized several free trade agreements, including with Oman, the UK, EFTA nations, and New Zealand, covering dozens of developed markets to boost trade access.
“India’s manufacturing PMI indicated a faster pace of expansion, driven by robust growth in domestic demand,” said Pranjul Bhandari, Chief India Economist at HSBC. These trends point to domestic strength offsetting softer external demand, positioning India for sustained growth amid global uncertainties.
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