The HSBC India Manufacturing PMI, a measure of overall conditions based on new orders, output, employment, supplier delivery times and stocks of purchases, fell sharply from 56.9 in February to 53.9 in March 2026, marking the lowest reading since June 2022.
A reading above 50 denotes expansion, while a reading below that level indicates contraction. “Growth in India’s manufacturing industry took a step back in March as cost pressures, fierce competition, heightened market uncertainty and the war in the Middle East all contributed to softer increases in new orders and output,” the report stated. “Firms also faced an intensification of cost pressures, the steepest since August 2022.”
As per the report, the two largest sub-components of the PMI-new orders and output-rose at the slowest rates since mid-2022. Anecdotal evidence showed that growth was curbed by challenging market conditions, cost pressures and the war in the Middle East, it said.
Analysing the March data, the report said that input prices increased to the greatest extent in over three and a half years, with aluminium, chemicals, fuel, jute, leather, fabric, oil, rubber and steel reporting higher prices.
“Firms seem to currently be absorbing a large part of the increase in input costs, keeping output prices relatively contained,” Pranjul Bhandari, chief India economist at HSBC, said.
According to Bhandari, disruptions linked to the conflict in the Middle East are reverberating through the global economy and weighing on Indian manufacturers. “Output and new orders slowed noticeably, signalling softer demand and greater uncertainty,” she said.