Effects of the global disruptions resulting from America and Israel’s war on Iran have started to show on India’s economy. On Monday, the final HSBC India services purchasing managers’ index (PMI), compiled by S&P Global, showed a fall to 57.5 in March from 58.1 in February, marking the slowest rate of expansion in 14 months.
This follows a bigger fall in the manufacturing PMI to 53.9 in March from 56.9, the lowest level in nearly four years.
Relatively speaking, the services sector has done better. Not only has it outperformed the factory sector, it remains above its long-span average of 54.4. Encouragingly, foreign orders climbed to their second highest on record while job creation picked up by the PMI was the strongest since mid-2025.
Yet, an overall loss in economic momentum now seems clear. A war-driven rise in input costs might already be weighing on demand. India’s high dependence on oil imports is just one point of exposure to this external shock.
The longer the war lasts, the steeper will be the inflation, growth and other challenges we face. Unfortunately, there is no sign of an end to hostilities. Business activity in India may yet find it harder to escape the consequences.