India's Manufacturing PMI Soars to a 17-Year High in August 2025

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31 Aug, 2025

India's Manufacturing PMI Soars to a 17-Year High in August 2025

A Resounding Industrial Revival

In August 2025, India's manufacturing sector delivered its strongest performance in over 17 years, with the HSBC India Manufacturing PMI surging to 59.3—its highest level since February 2008.

Boosted by robust domestic demand and expanding production, manufacturing output rose 7.7% year-on-year, up from 4.8% in the preceding quarter , . Firms continued to expand inventories, supported by a 16-month high in purchasing activity, and hiring, while slowing, remained in positive territory.

Though new export orders slowed—due partly to steep U.S. tariffs of 50% on Indian textiles, gems, chemicals, and other goods—domestic momentum remained relentless.

What It Means for the Indian Market

Strong Macroeconomic Tailwinds: This industrial revival lends weight to forecasts projecting 6.5% GDP growth in FY26, driven by manufacturing, services, and agriculture.

Market Confidence Booster: The surge is likely to bolster investor sentiment, particularly in capital goods, industrials, and mid-cap sectors—stocks likely to ride the wave of optimism.

Inflation Watch: Rising input and output prices are stoking inflationary pressures , . The RBI may monitor this closely, adjusting monetary policy if needed.

Policy Momentum: Government programs like Make in India and semiconductor manufacturing incentives may gain renewed traction amid the manufacturing upswing .

Cautious Outlook on Exports: Continued export-order moderation, mainly due to aggressive U.S. tariffs, looms as a downside risk—analysts warn it could shave off up to 0.5% from GDP growth, .

Regional Outlier: Amid widespread factory contractions across Asia—Japan, South Korea, Taiwan—India stands out with exceptional performance, albeit vulnerable to trade tensions.

By Nehal Taparia

This content is for educational and knowledge purposes only and should not be considered as investment or Trading advice. Please consult a certified financial advisor before making any investment or Trading decisions.

Our Recent FAQS

Frequently Asked Question &
Answers Here

1. What was the PMI reading for August 2025?

The HSBC India Manufacturing PMI hit 59.3 in August, its highest level since February 2008.

2. What factors fueled this surge?

Strong domestic demand, elevated production, broadened new orders, and inventory restocking pushed the PMI upward. Export orders grew at a slower pace owing to high U.S. tariffs.

3. How is manufacturing output growing?

Year-on-year, manufacturing output expanded by 7.7%, up from 4.8% in the previous quarter—driven by elevated production and healthy demand.

4. What’s happening with export orders?

Export orders remain positive but slowed compared to domestic demand. This moderation aligns with heightened U.S. tariffs on Indian goods such as garments, chemicals, and jewelry.

5. What are the inflationary signals?

Both input costs and output prices rose, suggesting inflation pressures. Nonetheless, firms are passing these costs onto consumers amid strong demand.

6. Is employment growing?

Yes—hiring continued for the 18th consecutive month, though the rate of job creation has slowed .

7. How does this PMI relate to GDP growth?

This strong manufacturing momentum supports expectations of 6.5% GDP growth for FY26, aligning with forecasts by both RBI and the Bank of Baroda, with GDP hitting 7.8% in Q1 FY26.

8. What downside risks are there?

The steep 50% U.S. tariffs on Indian exports pose a risk. Experts suggest these could reduce India’s growth by up to 0.5%.

9. How does India compare with regional trends?

While India’s manufacturing is booming, many Asian economies—Japan, South Korea, Taiwan—are witnessing contraction amid trade headwinds.

10. What’s the outlook moving ahead?

Monitor export trends and inflation closely. Continued domestic strength, coupled with supportive fiscal and manufacturing policies, could see sustained growth; conversely, any further escalation in tariffs could temper this optimism.