India's manufacturing activity gathered pace in April, with the seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index rising to 54.7 in April from 53.9 in March, according to data released by S&P Global on Monday.
Manufacturing activity was driven by strong exports, with only mild recoveries in new business intake and production among Indian manufacturers. The rates of increase were still the second-weakest since 2022.
Input costs and output charges rose at the fastest rates in 44 and six months, respectively, putting pressure on manufacturing growth.
"Survey participants indicated that advertising and demand resilience supported sales and production, but that growth was hampered by competitive conditions, the war in the Middle East, and a reluctance among clients to approve pending quotes," the report said.
The bright spot in the scenario was the sharp expansion in export orders, which hit a seven-month high, buoyed by higher demand from clients in countries, including Australia, France, Japan, Kenya, mainland China, Saudi Arabia, the UAE, and the UK.
"Spillovers from the Middle East conflict are becoming more evident, particularly through inflation: input costs increased at the fastest pace since August 2022, and output prices rose at the quickest rate in six months," Pranjul Bhandari, Chief India Economist at HSBC, said. "Even so, output, new orders (including exports), and employment all grew moderately, pointing to continued resilience in India's manufacturing sector".
Even as outstanding business volumes saw only a marginal rise, the rate of job creation was the strongest in ten months.
The overall level of positive sentiment among manufacturers slipped since March; however, it was the second-highest since November 2024, on the hopes that marketing efforts will yield results and that pending projects will be approved.