India’s manufacturing activity rises to four-month high in February: PMI

India’s manufacturing sector activity accelerated to a four-month high in February, driven by strong domestic demand, even as growth in new export orders continued to moderate, according to a monthly survey released on Monday. 

The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index rose to 56.9 in February from 55.4 in January, marking the strongest expansion since October. 

In Purchasing Managers’ Index (PMI) terms, a reading above 50 indicates expansion while a figure below 50 denotes contraction. 

Domestic demand fuels output growth 

“India’s final manufacturing PMI reflected an acceleration in manufacturing activity in February. Output expanded at a faster rate for a second month, supported by stronger domestic orders,” said Pranjul Bhandari, Chief India Economist at HSBC. 

According to survey participants, buoyant demand conditions, marketing initiatives, and rising client requirements contributed to another solid expansion in new business inflows. 

The report noted that efficiency improvements, healthy underlying demand, rising new work intakes and investments in technology collectively boosted production volumes during the month. 

Export momentum eases 

However, the survey flagged a continued slowdown in new export orders. Although some firms reported gains from Asia, Europe, the Middle East and the US, the pace of export growth has moderated since mid-2025. 

“Growth in new export orders continued its slowing trend that began in mid-2025, somewhat restricting employment creation in the manufacturing sector,” Bhandari said. 

Hiring, inventories, and cost trends 

With overall new orders expanding sharply, manufacturers increased purchases of raw materials to support higher output and replenish inventories. Firms stepped up input buying, built up stock levels and hired additional staff in response to rising workloads. 

On the pricing front, cost pressures remained relatively contained. Input costs rose at a moderate pace, broadly in line with January levels, suggesting limited immediate inflationary stress within the sector. 

Business sentiment for the year ahead remained upbeat. Around 16% of surveyed companies expect output growth over the next 12 months while fewer than 1% anticipate a decline. 

Marketing efforts and favourable demand conditions were cited as key factors underpinning optimism, according to the qualitative data. 

The HSBC India Manufacturing PMI is compiled by S&P Global based on responses from a panel of approximately 400 purchasing managers across the manufacturing sector.