India’s manufacturing growth hits four-month high in February

India’s factory activity expanded at its fastest pace in four months in February, driven by strong domestic demand for new orders and higher production, even as export growth slowed to its weakest level in nearly a year-and-a-half, a survey showed on Monday.

The data points to continued resilience in the economy this quarter after India recorded 7.8 per cent growth in the October-December period, supported by a 13.3 per cent rise in manufacturing. For the full fiscal year ending in March, the economy is expected to grow 7.6 per cent.

The HSBC India Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 56.9 in February from 55.4 in January, although it was lower than the preliminary estimate of 57.5. A reading above 50 indicates expansion.

“India’s final manufacturing PMI reflected an acceleration in manufacturing activity in February. Output expanded at a faster rate for a second month, supported by stronger domestic orders,” said Pranjul Bhandari, chief India economist at HSBC.

“However, growth in new export orders continued its slowing trend that began in mid-2025, somewhat restricting employment creation in the manufacturing sector.”

New export orders increased at the slowest pace in 17 months, indicating that uncertainty around U.S. tariffs continues despite a recent trade deal with India.

The survey was conducted between February 9 and February 23, after U.S. tariffs on Indian goods were reduced to 18 per cent from 50 per cent. Last week, President Donald Trump announced new global tariffs following the Supreme Court’s move to quash some levies.

Domestic demand remained strong, with new orders rising at their fastest pace since October. Production volumes also increased at the quickest rate in four months, supported by efficiency gains, sustained demand and investment in technology, according to firms.

Input cost inflation remained moderate and unchanged from January. However, manufacturers raised their selling prices at the fastest pace in four months, as strong demand enabled them to pass on higher costs.

Employment rose to a four-month high but remained marginal. Only four per cent of firms reported hiring, while most made no changes to staffing levels.

Business confidence for the year ahead improved to a four-month high, signalling expectations of continued economic growth despite weak external demand.