Activity in the manufacturing sector rose to a seven-month high of 55.1 in September, according to a private sector survey. However, activity in the sector over the second quarter of this quarter was the slowest since the COVID-19 pandemic-impacted Q2 of 2021-22. 

That said, September’s performance marked a significant recovery as the HSBC India Manufacturing Purchasing Managers’ Index rose by 2.3 index points from its 52.8 reading in August 2026. A reading above 50 denotes expansion in activity while one below 50 implies a contraction.

“September data showed a recovery in growth momentum across India’s manufacturing industry, with faster increases in new orders and output supporting job creation and inventory accumulation,” the report said. “Moreover, business confidence strengthened to a four-month high.”

“That said, the average for the second fiscal quarter stood at 53.8, its lowest since the same period in 2021,” it added.

Respondents said that stronger demand for electronic, food, pharmaceutical, and textile products drove a sharper increase in new business, with the upturn in total sales the fastest since February 2026. 

“New export orders also expanded at a quicker pace, with panel members particularly noting greater demand from clients in Brazil, Europe, the UAE and the U.S,” the report said. “This pick-up in demand momentum spurred the sharpest expansion in Indian factory production for four months.”

The report further said that, as per the surveyed firms, higher prices for electronic components, pharmaceutical items, and steel pushed up overall cost burdens in September. In addition, selling prices also increased at a quicker pace, but this was “nevertheless modest and below trend”.

“Hiring resumed at its fastest pace since May, and manufacturers became more optimistic about the months ahead,” Pranjul Bhandari, chief India economist at HSBC noted. “Companies bought more materials and built up stocks to prepare for anticipated sales.”