India’s Manufacturing Activity Hits 5-Year High in October on Strong Domestic Demand

Indian manufacturing output surged in October 2025, driven by robust domestic demand and steady job creation, according to the HSBC India Manufacturing PMI.

India’s manufacturing sector accelerated sharply in October, hitting a five-year high as robust domestic demand more than offset weaker export growth. The HSBC India Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 59.2 from 57.7 in September, surpassing the preliminary estimate of 58.4. A reading above 50 indicates expansion in activity.

Domestic Demand Drives Growth

Manufacturers reported strong growth in new orders and output, citing higher consumer demand, efficiency improvements, and investments in new technology as key contributors. Output growth matched the joint-fastest pace in five years, similar to levels seen in August.

However, export growth softened, with new international orders increasing at the slowest pace in 10 months, though still at a healthy rate.

Cost Pressures and Pricing Trends

Input cost inflation eased to an eight-month low, providing some relief to manufacturers. Despite that, output charge inflation — or the rate at which producers raise their selling prices — remained near a 12-year high for the second consecutive month.

Companies noted that elevated freight and labor costs were being passed on to customers, supported by strong underlying demand.

Sustained Job Growth

The manufacturing sector continued its 20-month streak of job creation in October. Firms expanded their workforce to manage higher workloads, although the pace of hiring remained steady compared to September.

“Robust end-demand fuelled expansions in output, new orders, and job creation. Meanwhile, input prices moderated in October while average selling prices increased as some manufacturers passed on additional cost burdens to end-consumers,” said Pranjul Bhandari, Chief India Economist at HSBC.

Business Optimism Softens Slightly

While overall confidence remained strong, the future output sub-index—which gauges business sentiment—slipped from September’s seven-month high. Despite this dip, optimism continues to be supported by expectations of sustained GST reforms, healthy demand, and ongoing domestic momentum in production and investment.