Kamal Ghorui
India’s manufacturing sector showed signs of slowing in March, as growth in activity moderated amid a mix of rising costs, competitive pressures and global uncertainty, according to the HSBC India Manufacturing PMI report released on Thursday. The Purchasing Managers’ Index (PMI) fell to 53.9 in March from 56.9 in February, signalling a softer expansion.The reading also slipped below its long-run average of 54.2, marking the weakest improvement in business conditions in close to four years. The report attributed the slowdown to a combination of domestic and international challenges that dampened the momentum seen earlier. Intense competition and heightened uncertainty in the market environment weighed on performance, while geopolitical tensions, particularly the ongoing conflict in the Middle East, further affected demand and production trends. “Growth across India’s manufacturing industry took a step back in March as cost pressures, fierce competition, heightened market uncertainty and the war in the Middle East all led to softer increases in new orders and output,” the report noted. Both new orders and output, key components of the index, continued to grow but at a slower pace, with expansion easing to its weakest levels since mid-2022. The report indicated that although demand remained positive, it was constrained by difficult operating conditions. Cost pressures intensified during the month, with input prices rising at their fastest rate in more than three-and-a-half years. A broad range of materials, including aluminium, chemicals, fuel, jute, leather, fabric, oil, rubber and steel, recorded higher prices. “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 report stated. Pranjul Bhandari, chief India Economist at HSBC, was cited by ANI as saying, “disruptions linked to the conflict in the Middle East are reverberating through the global economy and weighing on Indian manufacturers.” She pointed out that the slowdown in output and new orders reflected softer demand and increased uncertainty, even as input costs rose sharply across several categories. Even struggling with rising expenses, companies largely refrained from fully passing on higher costs to customers. “For now, firms appear to be absorbing much of the increase, keeping output prices relatively contained,” Bhandari said. As a result, the increase in selling prices was limited, with output price inflation easing to a two-year low. The report suggested that firms were focusing on retaining existing customers and securing new business in a highly competitive environment. “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,” it said. Employment trends offered a more positive picture. Hiring rose at the quickest pace in seven months, and the increase in workforce, combined with slower growth in new orders, enabled firms to reduce outstanding workloads for the first time in nearly one-and-a-half years. Companies also continued to build up stocks of raw materials, maintaining active purchasing strategies to support production and safeguard against potential supply chain disruptions. In the export segment, demand remained steady. Overseas sales expanded at their strongest pace since September, supported by clients across regions including Japan, mainland China, Europe and North America.
