India’s Manufacturing Rebounds in October Amid Rising Demand and New Orders

Manufacturing PMI Surges with October Gains

India's manufacturing activity bounced back in October, with the HSBC India Manufacturing Purchasing Managers Index (PMI) rising to 57.5, up from September’s 56.5. This marks a positive shift following an eight-month low, with the PMI maintaining its position above the expansion threshold of 50 for almost three consecutive years.

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Strong Demand Spurs New Orders and Export Growth

Domestic and international demand drove new orders, helping to reverse September’s slowdown. Export orders, in particular, showed recovery, with increased demand from markets across Asia, Europe, Latin America, and the US. Pranjul Bhandari, Chief India Economist at HSBC, observed, "India’s manufacturing PMI picked up in October as rapidly expanding new orders reflect strong demand growth."

Inflationary Pressures Continue to Climb

Manufacturers faced rising costs in materials, labor, and logistics, leading to increased input and selling prices. Persistent inflation impacted business expenses, yet resilient demand allowed firms to balance higher costs with steady output growth.

Positive Growth Forecasts Boost Confidence

The Reserve Bank of India (RBI) recently raised its FY25 GDP growth forecast from 7% to 7.2%, citing stronger rural and urban demand and favorable monsoon conditions. The festival season has also contributed to a surge in consumer confidence, further lifting sentiment across the manufacturing sector.

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Manufacturing as a Path to a $10 Trillion Economy

India’s ambitious goal of transforming into a $10 trillion economy within the next decade is closely tied to manufacturing growth in sectors like semiconductors, electronics, electric vehicles, renewable energy, and defense. Increased government spending on infrastructure has bolstered this growth, with Indian suppliers improving their capacity to meet rising demand comfortably.

The sustained expansion in manufacturing and supplier performance underscores India’s potential to meet its economic targets, driven by robust domestic demand and growing export competitiveness.

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