Manufacturing activity picks up in Oct on GST relief, tech investments

India’s manufacturing sector accelerated in October, driven by a combination of tax relief and rising investment in technology. According to the S&P Global-compiled HSBC India Purchasing Managers’ Index (PMI), activity rose to 59.2 in October from 57.7 in September, and well above the 57.5 recorded in October 2024. 

The survey shows that new orders expanded at a faster pace, with manufacturers attributing the uptick to stronger domestic demand, increased advertising, and the recent changes in the Goods and Services Tax (GST) structure, including a streamlined two-slab rate of 5% and 18% implemented from 22 September. Hiring picked up too, with the industry registering job creation for the 20th consecutive month, though the rate of hiring remained similar to the previous month.

Cost pressures eased in October, as input-price inflation moderated to its weakest in eight months. However, output-charge inflation remained high and unchanged from September, co-equal highest in 12 years, marking that firms were able to pass on cost burdens and benefit from strong demand. Inventories of raw materials and semi-finished goods rose at the second-fastest rate since May 2023, signalling that firms are preparing for continued expansion. 

Commenting on the outlook, Pranjul Bhandari, Chief Economist for India at HSBC India, noted that “robust end-demand fuelled expansions in output, new orders and job creation.” He added that manufacturers’ optimism about future business conditions remains strong, supported by expectations of GST reform, capacity expansion and healthy demand vigour. 

While international demand improved, the pace of export growth was slower than for domestic orders and remained the weakest so far this calendar year.

Source: Economic Times