India’s manufacturing PMI rises to 56.9 in February, up from 55.4 in January. The manufacturing activity gathered pace in February, driven by a strong pick-up in domestic demand even as export growth slowed to a 17-month low.
According to the HSBC India Manufacturing Purchasing Managers’ Index (PMI), a reading above 50 indicates expansion.
Domestic demand drives growth
Manufacturers sector reported a sharp rise in new orders, with growth accelerating to its strongest level since October 2025. Companies attributed the increase to stronger domestic demand, marketing efforts and rising client requirements.
However, export orders grew at their slowest pace in 17 months. Firms said overseas sales increased in Asia, Europe, the Middle East and the US, but the pace remained softer compared to domestic demand.
Output grew at the fastest pace in four months and stayed above its long-run average. Firms also increased hiring in February. Employment rose at the quickest pace in four months, though the overall pace of job creation remained modest.
At the same time, outstanding business volumes increased to a seven-month high. Companies said the build-up in backlogs encouraged them to add workers.
Input cost inflation remained moderate and unchanged from January. Firms reported higher spending on labour, materials and transportation.
Manufacturers raised selling prices at a slightly faster pace to protect margins. Output charge inflation accelerated and moved above its long-run average.
Meanwhile, suppliers delivered inputs more quickly, indicating an absence of major capacity pressures.
Outlook remains positive
Business confidence stayed upbeat. About 16% of firms expect output to rise over the next year, while fewer than 1% foresee a decline.
Domestic orders power factory output
Pranjul Bhandari, Chief India Economist at HSBC noted that India’s Output expanded at a faster rate for a second month. “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. However, growth in new export orders continued its slowing trend that began in mid-2025, somewhat restricting employment creation in the manufacturing sector,” Bhandari noted.