India’s manufacturing sector witnessed a strong start to 2025, rebounding from a period of moderated growth in December. With new orders rising at the fastest pace since last July, the sector benefitted from a sharp increase in exports, marking the steepest upturn in nearly 14 years, according to the HSBC India Manufacturing PMI for January.
The survey highlighted a stronger expansion in output, supported by robust domestic and international demand.
“India’s final manufacturing PMI reached a six-month high in January. Domestic and export demand contributed to the rise in new orders. The employment PMI indicated job creation in the manufacturing sector, with the index reaching its highest level since the series began. Input cost inflation eased for a second consecutive month, reducing the need for manufacturers to increase final output prices,” said Pranjul Bhandari, Chief India Economist at HSBC.
Cost pressures eased to their lowest level in 11 months, yet selling prices continued to rise due to buoyant demand and strengthened business confidence, the report stated.
The Purchasing Managers’ Index (PMI) rose from December’s 56.4 to 57.7 in January, indicating an expansion in the sector’s activity. The pace of growth was the highest since July and surpassed the long-term average. PMI values range between 0 and 100, with a reading above 50 indicating expansion compared to the previous month and below 50 indicating contraction.
Manufacturers reported an increase in new orders, citing improved domestic demand and growth in international sales. Total new business expanded at the fastest rate in six months.
International demand for Indian goods also strengthened in January, with panellists observing higher orders from various global markets. The growth rate in new export orders was the highest recorded in nearly 14 years, according to the PMI report.
As a result, manufacturers continued scaling up production volumes, with the latest increase being substantial and the fastest since October 2024.
The report also highlighted increased business confidence, with nearly 32 per cent of surveyed companies expecting growth in output, while only 1 per cent anticipated a decline.
Strong sales and positive market sentiment led companies to expand their workforce at the beginning of the fourth fiscal quarter (January-March), reinforcing expectations of sustained growth in the sector.
