India’s manufacturing activity eases to a nine-month low in November as export orders slow

India's manufacturing growth softened to a nine-month low in November as US tariffs hurt demand, according to a private survey released on Monday.

The HSBC India Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, fell to 56.6 in November 2025 from 59.2 in October, marking the slowest expansion since February 2025. A reading above 50 indicates expansion in activity.

“India’s final November PMI confirmed that US tariffs caused the manufacturing expansion to slow. The new export orders PMI fell to a 13-month low,” said Pranjul Bhandari, chief India economist at HSBC.

"Business confidence, as indicated by expectations for future output, showed a big fall in November, potentially reflecting increasing concerns about the impact of tariffs. The boost from the cuts in goods and services tax (GST) may be fading and it might be insufficient to offset the tariff headwind to demand,” said Bhandari.

Companies remained confident of a rise in output over the course of the coming 12 months, but positive sentiment fell to its lowest level in nearly three-and-a-half years. Downgraded forecasts stemmed from concerns around a competitive landscape, including competition from international firms, anecdotal evidence showed, it added.

“November's results showed an absence of pressure on the capacity of Indian manufacturers and their suppliers. Outstanding business volumes among goods producers were broadly unchanged from October, whereas vendor performance continued to improve," the survey said.

India’s manufacturing sector has come under pressure following a series of steep US tariffs on a wide range of Indian exports. Washington imposed a 25% tariff on almost all Indian goods in August, followed by an additional 25% levy later that month to penalise New Delhi for buying discounted Russian oil.

According to SBI Capital Markets’ EcoCapsule, a monthly economic analysis, India is among the hardest hit by US tariffs, facing an effective duty burden of about 50% since late August.

Though companies suggested that the trend for international sales remained favourable – reflecting greater sales to clients in Africa, Asia, Europe and the Middle East – there was a mild loss of overall growth momentum with on average, new export orders rising at the weakest pace in over a year, the survey said.

“The latest PMI reading underscores that India’s manufacturing engine remains resilient: domestic demand continues to be underpinned by strong festive-season consumption and the tailwinds from recent GST rate cuts,” said Rishi Shah, partner and economic advisory services leader, Grant Thornton Bharat.

These structural boosts have driven a rise in new orders, inventories and output, supporting jobs and confidence in the near term. “That said, with global demand softening and export orders losing some steam, downside risks from external headwinds — including volatile commodity prices and weaker global growth — cannot be ignored. Overall, the Indian economy appears well-positioned to absorb these shocks, though sustaining this momentum beyond the festive season will depend on domestic demand staying firm while external pressures moderate.”

The moderation in growth of PMI manufacturing comes at a time when India's year-on-year (YoY) GDP growth unexpectedly rose to a six-quarter high of 8.2% in Q2 FY26 from 7.8% in Q1FY26, in contrast with the expectation of a slowdown.

However, with manufacturing showing signs of slowing down, there is an expectation that the GDP growth rate will slow down in the coming quarters.

Looking ahead, an adverse base, the potential negative impact of US tariffs and limited headroom for capital spending by the government may dampen the pace of growth from the robust 8.0% seen in H1 FY26. Nevertheless, the FY26 real GDP expansion now appears set to print at 7.4%, ratings agency Icra has said.