India’s manufacturing industry maintained its upward trajectory in April 2025, clocking its fastest expansion in factory activity in the last 10 months, according to the HSBC India Manufacturing Purchasing Managers’ Index (PMI). The seasonally adjusted PMI rose marginally from 58.1 in March to 58.2 in April, signifying robust and sustained growth in business conditions.

Despite the slight increase, the April reading marks the highest output growth since June 2024, driven by buoyant demand, rising international orders, and confident production planning across various sectors, especially consumer goods manufacturing.

Strong Demand Fuels Growth

The PMI survey revealed a notable surge in new orders, both from within India and international markets. The second-fastest increase in international orders since March 2011 was recorded during the month. Export demand strengthened across regions, including Africa, Asia, Europe, the Middle East, and the Americas.

This international boost, combined with a healthy pickup in domestic demand, fueled an overall increase in total sales, prompting manufacturers to raise production volumes and invest in higher inventories.

Backlogs and Job Creation on the Rise

With rising demand, manufacturers also reported the highest backlog accumulation in over a year. This indicates that order books are filling up faster than they can be cleared, a positive sign of sustained momentum.

In response, manufacturers increased staffing levels. According to the survey, 9% of manufacturers hired more workers in April, offering a mix of permanent and temporary contracts. This level of job creation was described as historically strong, reflecting both optimism and necessity in the face of growing demand.

Input Costs Moderate, But Prices Surge

Although there was a modest uptick in input costs, the pace remained manageable. Key inputs like steel, paper, rubber, and transportation showed moderate inflation trends. However, the strong demand environment allowed manufacturers to raise selling prices sharply.

In fact, the survey pointed out that output charges rose at the steepest pace since October 2013. This indicates improved pricing power, allowing manufacturers to protect and possibly expand profit margins despite raw material cost increases.

Inventory and Supplier Performance

Manufacturers also showed greater confidence in future demand, with purchases increasing at the fastest pace since August 2024. However, post-production inventories fell at the quickest rate in over three years, suggesting that products are being shipped out rapidly to meet orders.

On the logistics side, supplier delivery times improved, with lead times shortening slightly for the first time since January 2025. This improvement points to less pressure on vendor capacities and smoother supply chain operations.

Optimism Prevails Among Manufacturers

One of the standout findings from the April PMI survey is the strong level of business optimism among Indian manufacturers. Firms expressed confidence in sustaining growth over the next 12 months, buoyed by:

• Stronger marketing initiatives

• Operational efficiency gains

• Rising interest from new clients and markets

This sentiment underscores the view that India’s manufacturing sector is well-positioned to contribute significantly to the country’s overall economic growth in FY2025.

Sector-Wise Strength

The PMI report highlighted broad-based growth across all sub-sectors, but the consumer goods segment was particularly strong. Consumer goods makers saw higher demand, production, and hiring compared to other segments.

This suggests that consumer sentiment remains resilient, further supported by festive and seasonal buying in certain regions, as well as improved rural demand.

Policy Implications and Future Outlook

The strong manufacturing PMI print in April comes as a positive signal for policymakers, indicating that the sector is rebounding well amid global uncertainties. The growth has been non-inflationary in terms of input prices, despite output prices rising, which might offer some comfort to monetary policy watchers.

The Reserve Bank of India may view this data as favorable for continued economic expansion, though it will likely monitor inflation trends in output prices closely.

Conclusion

India’s manufacturing sector showed resilience and strength in April 2025, with new orders, both domestic and international, propelling growth. Employment, production, and pricing power all moved upward in tandem, painting a healthy picture for the sector.

As manufacturers continue to show confidence in demand and future prospects, the industry appears well-aligned to support India’s broader economic ambitions, especially in the wake of global shifts in supply chains.

If this trend sustains, India’s manufacturing sector could emerge as a significant engine of job creation and export growth, further solidifying the country's role as a global manufacturing hub.

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