New Delhi, April 23 There was a strong growth in India’s composite flash purchasing managers index (PMI) for April on the back of an acceleration in manufacturing output and services business activity, according to HSBC data released on Wednesday.
The April reading came in at a robust 60, which was higher than the March one across the board, despite trade-related uncertainties, the report states. A figure of 50 on the PMI separates expansion from contraction.
New export orders accelerated sharply during the month, likely buoyed by the 90-day pause in the implementation of US tariffs. While the pace of expansion was a tad faster for manufacturers, the rise in services' new export business was equally impressive. At the composite level, new export orders grew at the fastest pace since the start of the series. Some panellists attributed it to the improved competitiveness due to rupee depreciation against the USD, according to the report.
Margins also improved during the month as cost inflation was in line with March levels, but prices charged rose a tad faster.
“Our framework of 100 indicators of growth shows that the March quarter looks better than the previous two quarters but remains well below June 2024," the HSBC report said.
There are several conflicting forces at play. Rural demand post-harvest, and monetary policy easing are likely to support growth. However, goods exports will be a drag once the restocking demand wanes, the report points out.
It also states that India's GDP growth could take a direct 0.5 percentage points tariff-led-hit in FY26. The indirect and second-order negative impact could also be meaningful, emanating from slower export volumes around the world, weaker global FDI flows, and the re-routing of exports hurting manufacturing.
“The RBI has already embarked on a rate-cutting cycle. It has delivered 50 basis points rate cuts, and we expect a 25 bp rate cut in each of the next three quarters, taking the repo rate to 5.25 per cent by end-2025. Furthermore, we also expect easy liquidity conditions to persist and help in the transmission of rate cuts," the HSBC report added.
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