Is India's Manufacturing Growth Accelerating in October Thanks to Domestic Demand?
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Synopsis
India's manufacturing sector is witnessing a remarkable growth surge in October, driven by robust domestic demand and reforms. This trend, highlighted by a rise in the PMI, showcases optimism for the future of the industry.
Key Takeaways
- Manufacturing PMI rose to 59.2 in October.
- Domestic demand is driving sector growth.
- GST reforms are positively impacting productivity.
- Job creation continues for the twentieth month.
- Companies are optimistic about future growth prospects.
New Delhi, Nov 3 (NationPress) The growth of India’s manufacturing sector experienced a significant uptick in October, primarily driven by strong domestic demand, GST 2.0 reforms, productivity improvements, and enhanced technology investments, according to a report issued on Monday.
The HSBC India Manufacturing Purchasing Managers' Index (PMI) climbed to 59.2 in October, up from 57.7 in September, based on data collected by the US-based financial intelligence firm S&P Global.
This increase was attributed to a faster rise in new orders and factory output at the start of the third financial quarter, spurred by an uptick in advertising and recent GST reforms, the report elaborated.
The rate of expansion matched levels recorded in August, which represented one of the strongest performances in the past five years.
A PMI reading above 50 signals economic growth, whereas a figure below 50 indicates contraction in manufacturing, services, or construction sectors. A value of exactly 50 denotes stagnant activity.
The rise in manufacturing PMI is attributed to robust end-demand, which fueled expansions in output, new orders, and job creation, stated Pranjul Bhandari, chief economist for India at HSBC.
In October, input prices saw a decrease, while average selling prices rose as some manufacturers transferred additional cost burdens to consumers, Bhandari added.
Despite input cost inflation dropping to an eight-month low, the inflation in output charges remained at its highest level in 12 years for the second consecutive month.
Firms reported passing higher freight and labor costs onto customers, while strong demand enabled them to sustain elevated prices.
Domestic sales growth surpassed that of export orders, which grew at a slower pace despite some improvements in international demand. Employment continued to rise for the twentieth consecutive month in October, with hiring levels remaining moderate and largely consistent with September.
Manufacturers maintain a positive outlook on future business conditions, attributing their optimism to GST reforms, capacity enhancements, and stronger marketing initiatives, the report concluded.
Point of View
The latest PMI figures underscore the resilience of India's manufacturing sector amidst global uncertainties. The focus on domestic demand and the positive impact of GST reforms indicate a path forward that not only fosters economic growth but also enhances job creation, aligning with the nation's long-term economic strategy.
NationPress
04/11/2025
Frequently Asked Questions
What is the significance of the PMI index?
The PMI index is a crucial indicator of the economic health of the manufacturing sector, with a reading above 50 indicating expansion and below 50 indicating contraction.
How do GST reforms impact manufacturing growth?
GST reforms streamline tax processes, reduce compliance costs, and encourage investment, leading to enhanced productivity and growth in the manufacturing sector.
What were the key factors driving the manufacturing growth in October?
Key factors included strong domestic demand, increased technology investments, and improvements in productivity, alongside the positive impact of GST reforms.
How does domestic demand compare to export orders?
Domestic sales growth has outpaced export orders, which have been growing at a slower rate despite some improvements in international demand.
What does the future hold for India's manufacturing sector?
Manufacturers are optimistic about future business conditions, attributing their confidence to ongoing reforms, capacity expansions, and enhanced marketing efforts.
