Key Points

The HSBC India Manufacturing Purchasing Managers' Index (PMI) climbed to a 16-month high of 59.1, driven by strong gains in new orders and output, though business sentiment and hiring momentum showed signs of moderation.

"India recorded a 59.1 manufacturing PMI in July, up from 58.4 during the prior month. This marked a 16-month high for the sector, which benefited from strong growth in new orders and output," said Pranjul Bhandari, chief India economist at HSBC.

"At the same time, however, business confidence fell to its lowest level in three years due to concerns over competition and inflation," Bhandari added.

India's manufacturing sector remains on a strong footing entering the second half of FY25.

The sustained manufacturing resilience comes on the back of robust domestic demand and continued output expansion.

India's private sector showed robust growth in July, fuelled by strong manufacturing and global demand. The headline HSBC Flash India Composite PMI Output Index, compiled by S&P Global, rose to 60.7 in July from 58.4 in June.

International orders received by private sector firms in India rose sharply at the start of the second fiscal quarter (Q2 FY26). The Indian companies remained optimistic about output growth over the next 12 months.

There is a firm pick-up in employment, especially in the service sector, suggesting healthy job creation accompanies the expansion of both India's manufacturing and service sectors.

Meanwhile, India is projected to see 6.4 per cent GDP growth in FY26 and FY27, with both numbers revised slightly upward, reflecting a more benign external environment than assumed in the April reference forecast, according to the International Monetary Fund's (IMF) World Economic Outlook (WEO).

The IMF revised upwards its outlook for India's GDP growth for the current fiscal by 20 basis points (bps) to 6.4 per cent. The global agency also revised upwards its growth forecast for FY27 by 10 bps to 6.4 per cent.

- IANS