India’s Manufacturing sector rebounded in March 2025, regaining momentum after a relatively slower February. The improvement was driven by a notable increase in overall sales, which spurred a corresponding rise in output—the sharpest recorded in the last eight months. This upturn in activity was achieved despite a slight moderation in the growth of international orders. To accommodate heightened demand, manufacturers drew on their inventories, leading to the fastest depletion of finished goods stocks since January 2022.
The HSBC India Manufacturing Purchasing Managers’ Index (PMI) stood at 58.1 in March 2025, rising from 56.3 in the previous month. This marked the highest level in eight months and reflected a considerable strengthening in the sector’s overall health, surpassing its long-term trend.
A key factor behind the PMI increase was the strong performance of the New Orders Index—the index’s largest component. In March, total new orders rose at the fastest pace since July 2024, with companies attributing the uptrend to stronger customer interest, favourable market conditions, and effective promotional strategies.
As a result, businesses ramped up production significantly in the closing month of the 2024–25 financial year. The pace of expansion was robust, exceeding historical averages and hitting an eight-month peak. Despite ongoing growth in export orders, the rate of increase eased to its lowest in three months. Companies with rising international sales noted higher demand from regions such as Asia, Europe, and the Middle East.
March data further revealed limited capacity constraints within the Manufacturing sector. The volume of outstanding business grew only slightly and at a slower rate than in February. Consequently, the hiring activity was moderated. Nonetheless, employment levels continued to rise at a steady pace, as indicated by the survey results.
Cost pressures persisted in March and contributed to an uptick in overall input costs, pushing inflation to a three-month high. However, this inflation rate remained below the long-run average, suggesting manageable cost-side risks for the time being.
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