India’s Purchasing Managers’ Index (PMI) for manufacturing climbed to 56.9 in February 2026 from 55.4 in January, signaling robust expansion in factory activity and marking a four-month high. The improvement reflects accelerated output growth, stronger domestic demand, and rising new orders, though growth in new export orders moderated to the slowest pace in 17 months.
## Key Developments
**Manufacturing PMI Rises to 56.9**
The HSBC India Manufacturing PMI rose to 56.9 in February 2026 from 55.4 in January, representing a 1.5-point improvement. The February reading marks the highest PMI reading in four months, indicating sustained and accelerating manufacturing momentum.
**Factory Output Growth Accelerates**
Output growth expanded at the fastest pace in four months, driven by robust domestic demand. Companies reported strong order intake from domestic customers, reflecting confidence in India’s economic trajectory and consumer demand resilience.
**New Orders Growth Strongest Since November**
New orders rose at the fastest pace since November 2025, with growth concentrated in domestic orders. This suggests that Indian manufacturers are experiencing strong order backlogs and production needs despite moderation in export demand.
**Employment Expansion Continues**
Employment rose modestly but registered the fastest pace in four months. Firms hired to manage higher workloads and increased production requirements, indicating business confidence and expectations of sustained demand.
**Input Costs Remain Moderate**
Input cost inflation remained moderate and unchanged from January levels. While raw material prices have seen some volatility due to global trade dynamics, manufacturing input cost pressures remain manageable, supporting profitability.
**Output Price Inflation Accelerates**
Output prices rose at a faster rate than input costs, outpacing long-term trends. This pricing power reflects strong demand dynamics and manufacturers’ ability to pass cost increases to customers.
## Outlook & Implications
The PMI trajectory suggests manufacturing growth momentum will persist through Q4 FY26 and into FY27, supported by domestic demand resilience and government infrastructure spending. This validates India’s domestic demand-led growth strategy and demonstrates the sector’s strength amid global uncertainties.
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