India's factory sector showed only a modest improvement in April, with the final HSBC India Manufacturing Purchasing Managers' Index (PMI) compiled by S&P Global moving to 54.7 from March's 53.9. While the index remains comfortably above the 50 threshold that separates expansion from contraction - a position it has held for nearly five years - the recent reading still left activity close to a four-year low.
April's PMI was below a preliminary estimate of 55.9, indicating a softer outcome than initially signaled. The reading represented a limited rebound from March's 45-month low rather than a decisive recovery, underscoring the ongoing fragility of factory momentum.
Two core components of the PMI - production and new orders, the latter being a principal gauge of demand - increased in April but only at the second-slowest pace recorded since mid-2022. Firms participating in the survey pointed to intense competition, the U.S.-Israel war with Iran, and lower order approval as factors restraining new work.
Input cost pressures intensified, rising to their highest level since August 2022. The survey linked the increase in cost burdens to the Middle East war, which pushed up prices for a range of raw materials and in particular for fuel. In response to higher input costs, manufacturers raised their selling prices at the quickest rate in six months.
There were some positive elements in the report. Export orders expanded at their fastest rate in seven months, providing a source of demand outside the domestic market. Despite generally subdued overall sales, firms increased payrolls at the strongest pace in ten months, with companies citing expansion plans as the reason for hiring. Business sentiment also improved, reaching its second-highest level since November 2024.
The data portray a manufacturing sector grappling with mixed forces: persistent cost inflation tied to geopolitical developments and restrained domestic demand on one hand, and pockets of external demand and labour-side resilience on the other. The PMI's position above 50 confirms continued expansion in headline terms, but the depth of that expansion remains limited by headwinds identified by firms surveyed.