Key Points

While the index retreated from its recent peak, as per the report, it continued to signal a sharp pace of expansion across the country's manufacturing and services sectors.

The HSBC Flash India Composite Output Index - a seasonally adjusted measure tracking the month-on-month change in the combined output of manufacturing and services - highlighted that India's private sector growth remained robust despite some signs of moderation.

The report stated "At 61.9 in September, the HSBC Flash India Composite* Output Index... came in below August's multi-year high of 63.2. The combined performance of India's manufacturing and service sectors strengthened during September, although the majority of the HSBC Flash PMI® indices retreated from August's recent highs to signal a modest slowdown".

September's performance marked a step down from August, as softer increases in new business intakes, output, and employment were recorded. International sales also rose at a weaker pace compared to earlier months.

Pranjul Bhandari, Chief India Economist at HSBC, said the manufacturing PMI had moderated but still showed healthy expansion.

She stated, "The manufacturing PMI moderated but its pace of expansion remains healthy. The imposition of the 50 per cent tariff rate by the US on India likely resulted in a slower rise in new export orders over Aug-Sep. This comes on the back of strong frontloading of exports to the US since early-2025. Meanwhile, new domestic orders rose for the last two months, likely on the back of announcements of lower GST rates. All said, the impact of higher tariffs have been somewhat offset by lower tax rates in the data so far."

Although the pace of expansion was slightly slower, demand conditions remained favourable, according to several firms surveyed.

Some respondents also pointed to competitive pressures that restricted order intakes. International sales trends showed divergence between manufacturing and services: service sector export growth slowed to the joint-weakest since March 2025, while goods producers reported a quicker upturn.

Overall, new export order volumes rose at the softest pace in six months.

Looking ahead, the report noted that the private sector firms expressed strong optimism about future output, with confidence levels climbing to a seven-month high. Additionally, many firms expect to benefit further from the GST rate cuts, which are seen as a boost to domestic consumption and business sentiment.

- ANI