India’s Manufacturing PMI Hits 17-Year High in August Despite Tariff Headwinds

New Delhi, Sep 1, 2025 – India’s manufacturing industry recorded its most substantial business conditions improvement in more than 17 years this August, driven by robust domestic demand, improved production efficiency, and sustained recruitment, said the HSBC India Manufacturing Purchasing Managers’ Index (PMI).

PMI Reaches 59.3 in August

The seasonally adjusted PMI rose to 59.3 in August, from 59.1 in July, the fastest growth pace since early 2008. In PMI readings, anything greater than 50 spells growth, and a figure less than that indicates contraction.

Domestic Demand Cushions Tariff Pressure

Export momentum, however, began to fray. New export orders expanded at their weakest pace in five months, primarily as a result of the 50% duty that the United States imposed on Indian exports from August 27. The step, along with a 25% fine on Russian crude imports, prompted American customers to delay shipments or reduce orders.

Nevertheless, aggregate demand remained robust with domestic buyers leading the way. Experts quoted said that strong consumption, along with efficient marketing and advertising campaigns, ensured that order books remained healthy in spite of external pressures.

Sector Highlights and Hiring Trends

Producers of intermediate goods took the lead in output and sales expansion, followed by those in the capital goods and consumer goods segments. To match demand, manufacturers increased purchases of inputs and hired additional labor. Employment increased for the 18th month running during August, although the pace of hiring fell somewhat relative to earlier months. Business sentiment was optimistic, with most companies increasing capacity in anticipation of continued demand in the next few quarters.

Broader Economic Context

India’s overall economy also posted a good performance, with 7.8% GDP expansion in April–June, the highest in five quarters. Nevertheless, Chief Economic Adviser V Anantha Nageswaran warned that the new US tariffs would act as a drag on growth in the July–September quarter and perhaps spill into the subsequent one. He was optimistic, however, that the effect would be temporary.

Outlook

With the PMI reaching a 17-year high, India’s manufacturing sector is still showing good vigor. Strong domestic demand is allowing the sector to sail through global trade problems, and persistent job generation indicates maintained confidence and long-term growth prospects.

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