India's manufacturing sector expanded at its slowest pace in nearly five years in July 2026. The HSBC India Manufacturing Purchasing Managers’ Index dropped to 53.5 from 54.2 in June, marking its weakest reading since August 2021. Although the index stayed above the 50-point mark that denotes expansion, growth, slowed due to weaker new orders, challenging market conditions, and reduced client interest. Employment growth eased for the third consecutive month, hitting its slowest pace in the current 29-month expansion. Supply-chain conditions improved significantly, with faster supplier deliveries and higher inventories as firms rebuilt buffers against potential disruptions.
Export demand remained strong, supported by orders from countries including Canada, Egypt, Indonesia, South Africa, Thailand, and the UAE. Input cost inflation moderated, while manufacturers increased selling prices to protect margins. Business confidence also improved, driven by optimism over stronger demand, infrastructure projects, and new client enquiries. Overall, the July data indicates that India’s manufacturing sector is navigating a challenging environment, affecting industrial production and economic recovery.
