April Composite PMI Reaches 60 as Business Growth Soars to 8-Month High Driven by Export Surge

India's private sector growth reached an eight-month high in April, driven by strong demand, particularly a rise in foreign orders for manufactured goods, according to a survey. However, business confidence showed signs of softening.

While the data highlights a strong start to the fiscal year for India's economy, the declining outlook may pose challenges in sustaining growth, especially given the impact of US President Donald Trump's tariffs on business sentiment.

India is trying to position itself as a manufacturing base of choice for the world as China faces high US duties. (Photo: Shutterstock)

The HSBC flash India Composite Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 60.0 in April, up from 59.5 in March, marking the fastest pace of combined manufacturing and services growth since August.

A reading above 50 indicates expansion.

Manufacturing growth was a key contributor, with the index climbing to 58.4 from 58.1, the highest in a year. The services PMI also demonstrated solid growth, increasing to a four-month high of 59.1 from 58.5 the previous month.

The main drivers of the overall positive momentum were higher new business in the services sector and an increase in goods production and new orders, particularly from international clients, which served as key indicators of demand.

"New export orders accelerated sharply, likely buoyed by the 90-day pause in the implementation of tariffs," Pranjul Bhandari, the chief India economist at HSBC, commented on Trump's decision to impose broad tariffs on goods from dozens of countries on April 2, before postponing their implementation for 90 days.

India is aiming to establish itself as the preferred global manufacturing hub as China faces elevated U.S. tariffs.

The record-breaking surge in new export business, the highest since the index began in September 2014, was predominantly driven by the manufacturing sector, which saw its largest growth in more than 15 years.

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

Amid growing capacity pressures, businesses across various sectors continued to expand their workforce, with goods producers seeing the highest level of employment growth since the survey began in March 2005.

Although input cost inflation varied, rising in the manufacturing sector and slowing in services compared to March, strong demand enabled companies to pass on increased costs to customers.

Selling prices rose more sharply, particularly among manufacturers.

Business sentiment was also mixed, with strong order inflows boosting optimism among goods producers, while a slowdown in the services sector led to a lower overall outlook for the year ahead, marking an eight-month low.

(This Article was originally published by Business Standard)