India’s manufacturing holds steady in April but input costs hit 4-year peak
Input price inflation jumped to steepest pace since August 2022 as war ripples through supply chains
India's manufacturing sector demonstrated continued resilience in April, expanding for the 46th consecutive month, but the war in the Middle East left a visible imprint on costs as input price inflation climbed to its highest level in nearly four years and the overall pace of improvement remained one of the weakest since 2022.
The HSBC India Manufacturing PMI — compiled by S&P Global — rose to 54.7 in April from 53.9 in March, remaining comfortably above the 50-point growth threshold. However, the reading represented the second-slowest improvement in overall operating conditions in close to four years, as the two most heavily weighted components of the index — new orders and output — both grew at rates that lagged readings seen over at least the past three and a half years.
The inflationary picture was the most pressing concern. Manufacturers reported sharply higher prices for aluminium, chemicals, electrical components, fuel, leather, petroleum products and rubber, with the Middle East conflict frequently cited as the cause. Input cost inflation accelerated to its fastest pace since August 2022, prompting firms to raise their own charges at the steepest rate in six months. Consumer goods was the only sub-sector to see cost pressures ease, though inflation there still outpaced that seen in most other industries — and it also recorded the sharpest rise in output charges of any category.
Exports provided the brightest spot in the survey. New orders from abroad expanded at a seven-month high, with firms citing stronger demand from clients in Australia, France, Japan, Kenya, mainland China, Saudi Arabia, the UAE and the United Kingdom.
Domestically, growth was more subdued. Manufacturers attributed the sluggish pace of expansion to competitive market conditions, the uncertainty created by the Middle East war, and a reluctance amongst clients to approve pending quotes. Raw material purchasing rose, but at one of its slowest rates in two and a half years. Input inventories grew at the most modest pace in nearly five years, as some firms deliberately kept stocks lean in response to softer sales. Finished goods inventories rose for the first time in six months, though only marginally.
On a more encouraging note, firms hired workers at the strongest pace in ten months, reflecting forward-looking expansion plans rather than immediate capacity pressure. Backlogs of unfinished work rose only marginally. Supplier delivery times actually shortened in April — a rare positive amid the global supply disruption — which firms attributed to improved coordination with new and existing suppliers.
Business confidence remained broadly positive, slipping slightly from March but holding near its second-highest level since November 2024. Optimism was anchored in hopes that marketing efforts would generate new business and that pending project approvals would materialise.
Pranjul Bhandari, chief India economist at HSBC, said the spillovers from the Middle East conflict were becoming increasingly visible, particularly through the inflation channel. "Input costs increased at the fastest pace since August 2022, and output prices rose at the quickest rate in six months," she said. Even so, she noted that output, new orders — including exports — and employment all grew moderately, pointing to continued underlying resilience in the sector.
The HSBC India Manufacturing PMI is compiled by S&P Global from monthly surveys of around 400 purchasing managers and has been tracking conditions in India's industrial economy since March 2005.
