India’s private sector closed the current 2024-25 fiscal year (FY25) on a solid note, with strong growth in new business and output, the preliminary HSBC Flash PMI data revealed on Monday.
While growth rates eased from February, they remained well above long-term averages. The HSBC Flash India Composite Output Index, compiled by S&P Global, dipped slightly to 58.6 in March against the final PMI figure of 58.8 recorded a month earlier in February.
The composite index tracks the combined performance of the manufacturing and service sectors. Notably, flash data is calculated from around 80-90 per cent of total responses received for the survey and helps provide an accurate early indication of the final data.
Despite the dip, the index stayed well above its long-run average of 54.7, indicating a continued sharp expansion. The slowdown was primarily attributed to a weaker rise in services activity, even as manufacturing saw its fastest output growth since July 2024.
HSBC Flash India Manufacturing PMI
Manufacturing emerged as the stronger segment in March, with the HSBC Flash India Manufacturing PMI rising to 57.6 from the actual figure of 56.3 in February. Three of the five key manufacturing indicators—output, new orders, and stocks of purchases—improved over the month, reflecting positive market conditions.
“When explaining the increase in output, private sector companies mostly remarked on positive demand trends,” the report noted. Manufacturing players registered a quicker upturn in new business from abroad in comparison to their services counterparts.
HSBC Flash India Services PMI
Service providers reported intensified competitive pressures, and this led to the second-slowest expansion seen since November 2023, the survey said. As such, the HSBC Flash India Services PMI stood at 57.7 in March, declining from the actual PMI figure of 59 in February.
Outstanding business volumes across the private sector in the country increased during the month under review, however, the rate of accumulation slowed down in comparison to February.
Pranjul Bhandari, Chief India Economist at HSBC, said, “India’s manufacturing sector expanded at a faster pace in March, according to the flash PMI. The output index rose to its highest level since July 2024. Yet the margin squeeze on manufacturers intensified as input price inflation ticked up while factory gate prices rose at the weakest rate in a year. The moderation in new export orders growth was also noteworthy amid tariff announcements.”
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Rising Costs and Hiring Trends
Hiring remained strong in March as efforts to manage workload and fulfill the increasing demand resulted in private sector service companies recruiting more employees. However, for the first time in seven months, manufacturers reported a faster increase in headcounts than service providers.
While business activity remained strong, companies faced rising operating costs. Higher expenses on raw materials such as copper, electronics, food (especially fruits and vegetables), leather, and vehicle spare parts contributed to increased input costs. The service sector experienced stronger cost pressures, even as the industry experienced a slowdown.
The aggregate rate of inflation remained below the long-run average. However, firms found it difficult to fully pass on these costs to consumers due to competitive market conditions. “Prices charged for Indian goods and services rose at the weakest rate since February 2022,” the report noted, adding that the manufacturing and service sectors recorded similar price increases.
Indian companies also saw a continued rise in order book volumes, with international sales providing support. However, export order growth slowed to a three-month low, particularly in the services sector. Manufacturing firms recorded a stronger upturn in overseas orders than their service counterparts.
Business confidence remained positive, though sentiment dipped to a seven-month low in March. Concerns over fierce competition were cited as a key factor in the cautious outlook among the survey respondents. Both manufacturing and services firms were slightly less optimistic about future output growth compared to February.
