Mumbai, India – September 1, 2026
India’s manufacturing sector expanded at its slowest pace in five years in August, with the HSBC India Manufacturing Purchasing Managers’ Index (PMI) falling to 52.8, down from 53.5 in July, according to survey results released Tuesday. The reading marks the index’s third consecutive monthly decline and its lowest level since August 2021, when it stood at 52.3. It also sits below the index’s long-run average of 54.2, and below the Flash India Manufacturing PMI estimate of 52.9 released earlier in August. A reading above 50 indicates expansion; the sector therefore continued to grow, but at a markedly slower rate.
Statement
“India’s final manufacturing PMI slipped to 52.8 in August, extending its decline for a third consecutive month,” said Pranjul Bhandari, Chief India Economist at HSBC. “The output index fell to its lowest level since August 2021, signalling that production is still expanding but at a markedly slower pace.”
Key Findings
New business intake grew at its slowest pace in five years, with survey panellists citing challenging market conditions and subdued demand for some products. Demand softened across two of the three industrial groups tracked by the survey, though consumer goods remained a relative exception. Production volumes across private manufacturers eased to their weakest level in five years.
Manufacturing employment declined for the first time in two-and-a-half years, though the survey described the fall as only fractional. Companies that reduced staffing levels cited lower business requirements as the main reason.
Stocks of finished goods increased for a second consecutive month, as sales came in lower than manufacturers had expected. Input purchases increased for a 62nd consecutive month, but at the weakest pace across that period, with some manufacturers continuing to replenish stock while others pulled back in response to softer demand.
Export Orders Held Up Better Than Domestic Demand
International orders continued to grow in August, with new export business coming from markets including Australia, Germany, mainland China, Spain, Thailand and the United States. However, the pace of export order growth moderated compared with July, alongside the broader slowdown in domestic new business.
Recent Trend
August’s reading extends a broader cooling trend over 2026. The HSBC India Manufacturing PMI had reached 56.9 in February, a four-month high at the time, supported by strong domestic demand and rising new orders. The index has since declined for three straight months through August, settling at its current five-year low.