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

admin — Mon, 03 Aug 2026 16:22:00 +0000

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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.

Published – August 03, 2026 09:52 pm IST

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Overhaul of import tariff structure, customs processes to cut trade costs, boost manufacturing, exports: GTRI

admin — Sat, 17 Jan 2026 08:29:00 +0000

India needs a sweeping overhaul of its import tariff structure and customs administration to reduce trade costs, strengthen manufacturing competitiveness and revive export growth, think tank Global Trade Research Initiative (GTRI) said on Saturday (January 17, 2026).

It also recommended movement toward zero duty on most industrial raw materials and key intermediates, while adopting a low standard duty of around 5% on finished industrial goods over the next three years.

The think tank also pitched for eliminating inverted duty structures, where inputs are taxed more heavily than finished products, quietly eroding domestic manufacturing competitiveness.

Extreme tariffs, such as the 150% duty on alcohol, should be rationalised, GTRI said, arguing that such rates encourage evasion while delivering negligible fiscal gain.

Equally important, tariff reform should be based on total import duty, not just headline basic customs duty.

Importers face a cumulative burden of cesses, surcharges and trade remedies, making the effective tariff far more complex than official rate schedules suggest, it said.

A report by GTRI said that India’s merchandise trade has crossed $1.16 trillion, and nearly 29% of gross domestic product flows through customs clearances.

In that context, the report noted that even modest inefficiencies now impose economy-wide costs, raising input prices, delaying shipments and weakening export competitiveness at a time when global companies are reassessing sourcing locations amid geopolitical fragmentation.

“India needs a sweeping overhaul of its import tariff structure and customs administration to cut trade costs, strengthen manufacturing competitiveness and revive export growth,” the report titled – A Blueprint for Modernizing India’s Import Tariffs and Customs Regime – said.

Tariffs are no longer a revenue tool, as customs duties now account for just 6% of gross tax revenue and average only 3.9% of the value of imports, it added.

The distribution of tariff revenue is highly skewed as nearly 90% of import value is concentrated in fewer than 10% of tariff lines or product categories, while the bottom 60% of tariff lines generate under 3% of customs revenue.

“Maintaining a complex tariff schedule for such a limited fiscal return imposes high administrative and compliance costs,” GTRI founder Ajay Srivastava said in the report.

It suggested easing customs rules and processes to help traders comply with the provisions smoothly.

The labyrinthine system of customs notifications, many of which amend decades-old rules and are not self-contained, as traders have to navigate hundreds of overlapping notifications to determine applicable duties, often without clear HS (harmonised system)-code references.

GTRI has urged the government to issue self-contained notifications that clearly state their full impact, and to publish all applicable import duties in a single, unified online schedule.

It also called for greater transparency around the renewal of time-bound duty exemptions, including brief public explanations of why they remain necessary.

To reduce disputes, the report recommended aligning India’s duty drawback system with the standard eight-digit HS codes already used for imports and exports.

At present, exporters use a separate coding system for refunds, increasing errors and delays.

It said that approval norms for inland container depots and freight stations should also be liberalised to support modern, niche supply chains, rather than forcing one-size-fits-all logistics infrastructure, the report argued.

Further, the report said that the customs officers should be redeployed toward audits, origin verification and inland clearance points.

“Customs officers should be posted overseas at Indian embassies and major ports to help exporters resolve non-tariff barriers and learn global best practices,” Mr. Srivastava said in the report.

The report is co-authored by former IRS (Customs) officer Satish Reddy.

Published – January 17, 2026 01:59 pm IST

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manufacturing growth – Artifex.News

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

Overhaul of import tariff structure, customs processes to cut trade costs, boost manufacturing, exports: GTRI