Manufacturing growth hits 9-month low in November amid tariffs, weak exports

India’s manufacturing sector lost steam in November, slipping to its slowest pace of expansion in nine months, as softer demand, weaker export orders, and persistent tariff pressures dampened business activity, according to a report released on Monday.

The seasonally adjusted HSBC India Manufacturing PMI (Purchasing Managers’ Index) fell sharply to 56.6, down from 59.2 in October, signalling the weakest improvement in operating conditions since February. A reading above 50 indicates expansion.

Tariffs weigh heavily on growth

“India's final November PMI confirmed that US tariffs caused the manufacturing expansion to slow,” said Pranjul Bhandari, Chief India Economist at HSBC. Manufacturing firms continued to report healthy international demand across Africa, Asia, Europe, and the Middle East, but the overall momentum weakened.

The report noted:

• New export orders rose at the slowest pace in over a year, hitting a 13-month low.

• Companies cited concerns about the impact of US tariffs on Indian goods, particularly labour-intensive sectors.

This comes as India and the US negotiate a framework trade deal aimed at easing reciprocal tariff barriers. Commerce Secretary Rajesh Agrawal said last week that India hopes to reach an outline agreement this year, even as the broader BTA (Bilateral Trade Agreement) remains under discussion.

Firms reported a milder rise in both sales and production, with anecdotal inputs suggesting “challenging market conditions” and cooling domestic demand.

Bhandari noted that the earlier boost from GST cuts — which had supported demand and reduced informal sector competition — “may be fading, and might be insufficient to offset the tariff headwind to demand.”

Costs, hiring and sentiment all weaken

The report highlighted a broad-based easing across key indicators:

• Input cost inflation fell to a nine-month low.

• Output price inflation eased to its softest rate in eight months, indicating limited pricing power.

• Employment growth slowed to the softest pace in the current 21-month stretch of uninterrupted job expansion.

Manufacturers also scaled back their purchasing activity, aligning input buying with lower new order growth.

Business confidence hits 3.5-year low

Despite expecting output to rise over the next 12 months, manufacturers were the least optimistic in nearly three-and-a-half years. Concerns cited by surveyed firms included:

• Intensifying competition from foreign manufacturers

• Geopolitical uncertainty

• Weakening export competitiveness

• Tariff-related unpredictability in the US market, India’s largest trade partner

The HSBC India Manufacturing PMI is compiled by S&P Global, using responses from around 400 manufacturing companies across sectors and geographies.