India’s Manufacturing Growth Moderates to 54.7 in October as Export Orders Hit Six-Month High
India’s manufacturing sector continued to demonstrate resilience in October 2026 although the pace of expansion moderated slightly amid slower growth in factory output and domestic orders. The HSBC India Manufacturing Purchasing Managers’ Index , compiled by S&P Global, declined to 54.7 in October from 55.1 in September.
Despite the moderation, the index remained comfortably above the 50-point threshold which separates expansion from contraction, indicating sustained growth in industrial activity.
Export Demand Strengthens India’s Industrial Momentum
International demand emerged as a major growth driver with new export orders recording their fastest expansion in six months. Indian manufacturers reported stronger demand from markets including the United States, United Kingdom, Canada, Bangladesh, Indonesia, Nepal, Saudi Arabia and the UAE.
Fresh customer acquisitions, favourable demand conditions and new product launches also supported manufacturing activity. However, the growth in factory output moderated compared with September, particularly in the intermediate goods segment.
Cost Pressures Ease, Providing Relief to Manufacturers
A significant positive development was the moderation in manufacturing inflation. Input cost inflation declined to its lowest level since February, despite higher prices for certain raw materials and energy inputs. Selling price inflation also weakened to its lowest level in nearly four years, indicating relatively limited cost pass-through to consumers.
Employment and Inventory Trends Reflect Mixed Signals
Manufacturing employment increased for the second consecutive month, although job creation remained marginal. Meanwhile, finished-goods inventories recorded their fastest increase in the survey’s history, while input inventories rose at their strongest pace in eight months.
However, business confidence weakened and remained below its long-term average, reflecting cautious expectations about future demand.
Strategic Economic Implications
The October PMI reading highlights the underlying strength of India’s manufacturing ecosystem, particularly its growing integration with international markets. Strong export orders, moderating input costs and sustained industrial expansion provide a favourable foundation for manufacturing competitiveness.
However, slower hiring, moderating domestic demand and declining business optimism underline the need to strengthen industrial investment, productivity, supply-chain resilience and export competitiveness. The next phase of manufacturing growth will depend on converting international demand into sustained domestic production capacity and employment generation.
