India’s manufacturing sector ended 2025 on a relatively strong note despite easing growth momentum, according to the latest HSBC India Manufacturing PMI released on Friday.
Manufacturers continued to report expansions in new orders and output, although the pace of growth softened towards the end of the calendar year. The PMI survey showed that while demand conditions remained positive, competitive pressures and weaker sales of certain products weighed on the overall momentum.
Several indicators tracked by the survey pointed to a slowdown in growth during December. Employment rose at the slowest pace in the current 22-month period of job creation, while growth in input purchases was the weakest in two years, reflecting a more cautious approach by firms amid softer demand trends.
Input cost pressures remained muted. The survey noted that input costs rose at a historically negligible pace, while charge inflation eased to a nine-month low, indicating limited pricing pressure across the sector.
The seasonally adjusted PMI index fell from 56.6 in November to 55.0 in December, marking the weakest improvement in manufacturing sector health in two years. Despite the decline, the reading remained above the long-run average, signalling continued expansion.
Part of the moderation in total sales was attributed to a slower rise in international orders. New export orders increased at the weakest pace in 14 months. Where export growth was reported, manufacturers cited improved demand from clients in Asia, Europe and the Middle East.
The survey also showed that a softer increase in new business led companies to limit the scale of their input purchases. Although buying activity continued to rise, the rate of growth slipped to a two-year low.
Factory employment saw only a marginal increase in December, reflecting a general lack of pressure on operating capacity. The pace of job creation was the slowest since the current expansion phase began in March 2024.
Commenting on the data, Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, said India’s manufacturing industry closed 2025 in good shape despite the loss of momentum. She said strong new business inflows could keep companies engaged into the final quarter of the financial year, while subdued inflationary pressures may continue to support demand.
She also pointed to a sustained period of softer growth in export orders, noting that the share of companies reporting higher international sales in December was about half the average seen in 2025. According to the survey’s anecdotal evidence, export destinations have narrowed, with shipments largely directed towards Asia, Europe and the Middle East.
With Indian manufacturers facing lower cost pressures than many global peers, she said competitive pricing could help firms attract new business from additional regions in the coming year.
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