India’s Manufacturing Sector Booms with Robust Domestic Demand

The manufacturing industry in India witnessed notable growth in October, with the HSBC India Manufacturing Purchasing Managers' Index (PMI) climbing to 59.2, up from 57.7 in September, as per data released by S&P Global.

This improvement signifies an accelerated enhancement in the sector's health, spurred by GST relief, productivity gains, and increased technology investments.

According to the HSBC India report, manufacturing conditions continued to strengthen, driven by robust domestic demand. While output and purchasing activity surged, external sales momentum slowed, highlighting the domestic market as the key growth driver. Despite stronger domestic orders, international demand grew at a slower pace compared to previous months.

Manufacturers increased their purchases of raw materials and semi-finished goods, reflecting confidence in sustained demand. Buying levels hit a peak not seen since May 2023. Despite the demand surge, capacity pressures were mild, with minimal backlog increases.

Suppliers efficiently dispatched inputs, resulting in the most significant reduction in delivery times over four months. Inventories of raw materials and semi-finished goods rose at the second-fastest rate since March 2005.

Looking forward, manufacturers stay optimistic about growth prospects, bolstered by potential gains from GST reform, capacity expansion, and strategic marketing efforts. Companies remain confident in demand resilience and expect pending contracts to further boost production momentum.