Manufacturing Sector At 4-yr Low Growth Pace In March

New Delhi: India’s manufacturing sector grew at its slowest pace in nearly four years in March 2026 as the Middle East war disrupted supply chains and dented demand, while higher oil prices drove up input costs. The slowdown of manufacturing activities in the country was mainly due to the rising cost pressures, intense competition and heightened uncertainty in the ongoing conflict, a private survey showed on Thursday.

As per the survey, the seasonally adjusted HSBC India manufacturing purchasing managers' index (PMI) fell from 56.9 in February to 53.9 in March, signalling the weakest improvement in overall business conditions in close to four years. In the PMI parlance, a print above 50 means expansion, while a score below 50 denotes contraction.

“India's manufacturing PMI eased to 53.9 in March from 56.9 in February, marking its lowest level since June 2022. Disruptions linked to the conflict in the Middle East are reverberating through the global economy and weighing on Indian manufacturers,” said Pranjul Bhandari, chief India economist at HSBC.

The survey also showed that firms faced an intensification of cost pressures, the steepest since August 2022. “But, there was a slower increase in output charges. The rate of output price inflation receded to a two-year low, curbed by customer-retention efforts and attempts to secure new clients at some firms, the survey said.

Bhandari aso said that March data saw input prices increase to the greatest extent in over three-and-a-half years. “Aluminium, chemicals, fuel, jute, leather, fabric, oil, rubber and steel were some of the items reported to be up in price,” the economist added.

The survey further said that two largest sub-components of the PMI, new orders and output, rose at the slowest rates since mid-2022, while the growth was curbed by challenging market conditions, cost pressures and the war in the Middle East.

“Output and new orders slowed noticeably, signalling softer demand and greater uncertainty. Meanwhile, input costs rose sharply across a broad range of items, including aluminium, chemicals and fuels. For now, firms appear to be absorbing much of the increase, keeping output prices relatively contained," Bhandari said.

Indian manufacturers registered the strongest expansion in external sales since last September, with gains noted from clients in Australia, Brazil, Canada, mainland China, Europe, Japan, the Middle East, Turkey and Vietnam. “Indian manufacturers raised employment to the greatest extent in seven months and became more optimistic towards the year-ahead outlook for production,” the survey said.