In October 2025, India’s manufacturing sector accelerated to a five-year high, driven by robust domestic demand, GST reforms, productivity enhancements, and technology investments. The HSBC India Manufacturing Purchasing Managers’ Index rose to 59.2 in October from 57.7 in September, showing the fastest factory expansion in five years. New orders and output proliferated, propelled by robust local demand and slower export demand. Growth was supported by strong regional demand. Export continued to deteriorate. Manufacturers approved tax pay on consumer expenditure due to GST 2.0 and generous bequests. The robust sectoral growth not only led to a ninth-place finish in the festive season but also stimulated job creation. Although the financial statement for inputs decreased, the financial statement for performances increased. This shows that some of the burden has been shifted to the purchaser. The powerful sectoral achievement indicates well-founded sectoral confidence in future expansion, driven by increasing productivity, confidence in financial commitments and policy, and solid native demand and exports, to make India a global production powerhouse.
Domestic Demand and GST Reforms
The robust manufacturing activity was driven by strong end-user demand. Companies indicated that the increased advertisement, revitalized consumer confidence, and the new Goods and Services Tax-oriented policies drove the impetus in new orders and production. The GST 2.0 explicitly restructured tax structures and reduced compliance burdens, promoting faster business activity in the market-border environment. The heightened demand coincided with a festive season, pushing up sales and production.
Output and Employment Growth
Factories expanded output at one of the quickest rates in the last five years, comparable to the previous August. Expansion was matched by factor hiring, with manufacturers’ faith in the ability to meet the growing demand and production conditions. An increase in input purchases enabled manufacturers to build stock to fulfill future orders, and the sector’s vigorous growth further supported the flow-through of industrial indices.
Export Market and Challenges
However, although this remained the main driver, export orders expanded at a slower pace, with the slowest growth in ten months. International demand for Indian manufactured goods, although still steady, was less vibrant than in recent months. In addition to these developments, manufacturers were affected by global geopolitical tensions, higher operational costs, and a labor shortage. However, with continued policy support and infrastructure enhancements in place, manufacturers remain optimistic about overcoming these obstacles.
Investment and Long-term Outlook
India’s manufacturing is poised for sustained growth until fiscal year 2025-26. Supported by investment optimism and Government push-through initiatives, such as the PLI schemes, the manufacturing sector is expanding into high-growth sectors, including electronics, automotive, and capital goods, with high capacity utilization rates and planned new investments. The growth path aligns well with India’s plan to emerge as a $1 trillion manufacturing economy by 2026, demonstrating strong domestic production and export performance.
Summary
In sum, India’s manufacturing sector reached a five-year high on the heels of robust domestic consumer demand, successful GST reforms, increased productivity, and ongoing technology-driven investments. The 59.2 PMI also implies faster output, orders, and job creation, accompanied by low input costs and high selling prices. Although export growth was exemplary, it was softer than domestic demand growth. Overall, the performance illustrates the nation’s manufacturing resilience and continuous expansion across the value chain, confirming India’s quest to become a global manufacturing hub with growth opportunities.