India’s Private Sector Growth Reaches Eight-Month High

By Anant Chandak
BENGALURU (Reuters) – India’s private sector growth rose to an eight-month high in April, fueled by robust demand, particularly a surge in foreign orders for manufactured goods, according to a survey. However, business confidence showed some signs of softening.

While the latest data underscores a vibrant start to the fiscal year for India’s economy, the souring outlook will make it challenging to maintain momentum, especially given the impact of U.S. President Donald Trump’s tariffs on business sentiment.

The HSBC flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, climbed to 60.0, up from 59.5 in March, marking the strongest pace of combined manufacturing and services growth since August. The 50-mark separates growth from contraction.

Manufacturing growth underpinned this strong performance, with the index rising to 58.4 from 58.1, reaching a level not seen in a year. The services PMI index also showed solid growth, rising to a four-month high of 59.1 from 58.5 last month.

Higher new business in the services sector and improvements in goods production and new orders, particularly from international clients, were the primary drivers of this positive momentum.

“New export orders accelerated sharply, likely buoyed by the 90-day pause in the implementation of tariffs,” said Pranjul Bhandari, chief India economist at HSBC, referring to Trump’s announcement of sweeping tariffs on April 2, which were deferred for 90 days.

India aims to establish itself as a preferred manufacturing base as China faces high U.S. duties. The record surge in new export business, the strongest since the index was measured in September 2014, was heavily concentrated in manufacturing, which saw the most significant increase in over 15 years.

“As a result, output and employment grew for both manufacturers and service providers,” Bhandari added.

Faced with intensifying capacity pressures, firms continued to hire additional staff across sectors, with goods producers recording the highest employment growth since the survey began in March 2005.

While input cost inflation trends were mixed—accelerating in the manufacturing sector and decelerating in services—robust demand allowed firms to pass higher costs to clients. Selling prices saw a sharper increase, led by manufacturers.

Business sentiment was also mixed: strong order inflows improved optimism among goods producers, but softened in the services sector, resulting in an overall outlook at an eight-month low for the coming year.