The HSBC Purchasing Managers’ Index (PMI), compiled by S&P Global, stood at 56.5 in November 2024. The PMI reading was above its long-run average of 54.2.
“India’s final November PMI confirmed that US tariffs caused the manufacturing expansion to slow,” said Pranjul Bhandari, India chief economist at HSBC.
India is hit with a 50% tariffs by the US, including a 25% penalty for importing Russian oil.
While international sales remained favourable, with stronger demand from Africa, Asia, Europe and the Middle East, the overall growth momentum weakened. Export orders PMI fell to a 13-month low.
Last week, commerce secretary Rajesh Agrawal said India is hopeful of reaching a trade deal with the US this year. Both countries are currently negotiating a bilateral trade agreement (BTA).
According to the survey, new orders declined to a nine-month low due to tough market conditions, project delays and intensified competition. Output followed a similar trend, reaching its weakest expansion since February.
“The boost from the cuts in goods and services tax (GST) may be fading and it might be insufficient to offset the tariff headwind to demand,” said Bhandari.
Effective September 22, the GST Council approved a simplified 5% and 18% rate, lowering taxes on various household goods.
“While new business growth and efficiency gains supported an increase among some firms, others suggested that subdued demand for some of their products constrained output levels at their units,” the survey said.
Looking ahead, business optimism fell to its lowest level since mid-2022 amid concerns about rising competition, including from overseas manufacturers.