India’s manufacturing sector activity growth falls to 5-year low in July amid challenging market condition: PMI

India’s manufacturing sector activity growth fell to a five-year low in July, due to slower rise in new business orders amid increasingly challenging market conditions, a monthly survey said on Monday (August 3, 2026).

The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index, fell from 54.2 in June to 53.5 in July — the lowest since August 2021 and below the long-run series average of 54.2.

The HSBC India Manufacturing Purchasing Managers’ Index (PMI) is a gauge of overall conditions derived from measures of new orders, output, employment, supplier delivery times and stocks of purchases.

In the Purchasing Managers’ Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.

During July, the rate of growth in new orders was the second-weakest in over four years. Panel members indicated that advertising and demand resilience supported sales, which were somewhat curbed by increasingly challenging market conditions and reduced client interest for key items.

On the employment front, the survey said Job creation across India’s manufacturing industry weakened for the third straight month in July. The rate of increase in employment was the slowest in the current 29-month period of uninterrupted growth.

According to the survey, companies saw a notable improvement in supply-chain conditions during July. In fact, input lead times shortened at a near survey-record pace.

“The suppliers’ delivery times index rose in July, an encouraging sign that supply chain delays are continuing to unwind. However, renewed tensions in the Middle East have raised fresh doubts about how durable these improvements will be,” said Pranjul Bhandari, Chief India Economist at HSBC.

On supply-chain conditions, Mr. Bhandari said manufacturers appear to be rebuilding buffers: inventories of both inputs and finished goods increased alongside a rise in purchasing volumes, suggesting firms are securing supply and limiting exposure to potential disruption.

“Meanwhile, output and new export orders strengthened, pointing to resilient demand, particularly from overseas markets. Price pressures also shifted: input cost inflation moderated, but output charge inflation accelerated, indicating firms are once again passing through price increases to protect margins,” Mr. Bhandari said.

Meanwhile, cost pressures receded to their weakest in five months, though companies continued to report higher prices for transportation in particular. Meanwhile, there was a moderate increase in selling prices that was broadly similar to June.

“A welcome development was seen for new export orders, which increased at a faster rate. Also, there was a mild recovery in business optimism,” the survey said.

There was a marked and accelerated upturn in external orders. Among many, firms noted gains from Canada, Egypt, Indonesia, Kenya, Nepal, South Africa, Thailand and the UAE.

Business sentiment strengthened from June’s recent low, with firms signalling a positive outlook for demand, infrastructure projects and new client enquiries. Some businesses expected market conditions to improve and hoped their marketing initiatives would pay off.

The HSBC India Manufacturing PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers.