India’s manufacturing sector recorded its weakest improvement in nearly two years in December, as softer growth in new orders weighed on activity and prompted firms to curb input purchases and slow hiring, according to a monthly survey released on Friday.
The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI), a key gauge of sector performance, slipped to 55 in December from 56.6 in November. In PMI terms, a reading above 50 signals expansion, while a score below 50 indicates contraction.
“Even with growth momentum easing, India's manufacturing industry wrapped up 2025 in good shape. The sharp rise in new business intakes should keep companies busy as we head into the final fiscal quarter, and the lack of major inflationary pressures could continue to support demand,” said Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence.
The survey showed that the close of the 2025 calendar year was marked by a loss of growth momentum across several indicators tracked by the HSBC India Manufacturing PMI. Production growth slowed to a 38-month low, alongside the weakest rise in new orders in two years.
The moderation in overall sales was partly due to a softer expansion in international demand. New export orders increased at the slowest pace in 14 months. Where growth was reported, respondents pointed to improved demand from clients in Asia, Europe and the Middle East.
“We have seen a steady spell of softer growth in new export orders. In fact, the share of companies signalling higher international sales in December was about half of the average for 2025. The survey's anecdotal evidence has also pointed to a narrower range of export destinations, with goods mainly heading to Asia, Europe and the Middle East,” Lima said.
Weaker growth in new business intakes led companies to rein in input purchasing. In addition, with limited pressure on operating capacity, factory employment rose only marginally in December.
“The pace of job creation was the lowest in the current period of growth that began in March 2024,” the survey said.
On pricing, the survey noted that input costs increased at a historically negligible rate, while the pace of ‘charge inflation’ softened to a nine-month low.
Looking ahead, manufacturers expect output to rise in 2026 compared with current levels, although overall sentiment has dropped to its weakest in nearly three-and-a-half years. While advertising, favourable demand trends and new product launches were seen as supportive factors, some firms expressed concerns about competitive pressures and market uncertainty.
“With Indian manufacturers facing less intense cost pressures than elsewhere, many will be hoping that competitive pricing can help bring in new business from other regions in the new year,” Lima said.
S&P Global compiles the HSBC India Manufacturing PMI based on responses to questionnaires sent to a panel of around 400 purchasing managers.