India’s manufacturing sector lost further steam in November, with growth slipping to a nine-month low as steep US tariffs continued to hit demand. The latest survey data suggest that the sector, which had been buoyant in recent quarters, is now feeling the full impact of global trade tensions.
The weaker reading comes just days after official figures showed Asia’s third-largest economy expanding by a stronger-than-expected 8.2 percent in the July–September quarter. Manufacturing was a key driver of that performance, though economists now expect the sector to have cooled meaningfully as the Trump administration’s punitive tariffs feed through.
HSBC’s India Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, fell to 56.6 in November from October’s robust 59.2, and below the flash estimate of 57.4. Despite the slowdown, the index has remained above the 50-point threshold separating expansion from contraction for 53 consecutive months — the longest such run since the survey began in 2005.
The deceleration was broad-based. Factory output and total new orders—both key indicators of demand—rose at their weakest pace since February. Firms cited challenging market conditions, delays in project starts, and intensifying competition as factors behind the softer activity.
External demand proved a particular drag. While the PMI report did not explicitly reference the US, India’s largest export market, it noted that new export orders expanded at their slowest rate in more than a year. This was despite continued sales to clients across Africa, Asia, Europe, and the Middle East. Recent government data have also highlighted a record trade deficit, with shipments to the US falling nearly 9 percent year-on-year after Washington imposed 50 percent tariffs on Indian goods.
The final November PMI confirmed that US tariffs had slowed the manufacturing expansion. Business confidence—measured by expectations for future output—has seen a sharp decline, likely reflecting growing unease over the tariff impact. The boost from recent cuts to goods and services tax may be diminishing and might not be enough to counter the drag from weaker demand.
Hiring momentum also softened, with job creation growing at the slowest rate in 21 months. The business expectations sub-index slipped to its lowest level since mid-2022, as firms expressed concerns about an increasingly competitive environment, including pressure from global rivals.
One positive development came from easing price pressures. Input cost inflation was at its lowest in nine months, allowing manufacturers to limit increases in selling prices. Output charges rose at the softest pace since March.
The moderation in prices is expected to support the Reserve Bank of India as it weighs its next policy move. Analysts anticipate a 25-basis-point cut to the repo rate, taking it to 5.25 percent, when the Monetary Policy Committee meets later this week amid subdued consumer inflation.
