India's March PMI data signalled a clear loss of momentum across both manufacturing and services. The HSBC India Manufacturing PMI slipped sharply to 53.8, down from 56.9 in the previous month, marking its weakest reading since September 2021. Meanwhile, the HSBC India Services PMI eased to 57.2 from 58.1 month‑on‑month, indicating continued expansion but at a slower pace.
This broad moderation dragged the HSBC India Composite PMI down to 56.5 in March from 58.9 in February, undershooting market expectations. The latest figures show that India's private‑sector activity, which had been strengthening consistently since the start of 2026, has now cooled to its slowest level since October 2022.
Firms pointed to the Middle East war, volatile market conditions, and rising inflation as key factors weighing on growth. Cost pressures intensified further, with input prices rising at the fastest pace in 45 months, while selling prices climbed at the fastest rate in seven months, suggesting that inflationary stress remains firmly embedded in the system.
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The ongoing U.S.–Israel conflict with Iran has disrupted energy markets and trade routes, adding external pressure on India's economy. Acknowledging the risks, Prime Minister Narendra Modi told parliament that the situation in West Asia remains “concerning” and warned that the difficult global conditions created by the conflict could persist for an extended period. He urged citizens to stay prepared and united, drawing parallels to the resilience shown during the COVID‑19 pandemic.
India, heavily dependent on energy imports, remains particularly vulnerable to elevated oil prices and disruptions to shipping corridors. The resulting rise in energy costs is expected to widen the current account deficit further, contributing to the recent weakness in the rupee, which has slipped to record lows.
The slowdown in March stands in contrast to the strong business optimism earlier this year, when rising new orders and international sales had encouraged firms to scale up output and increase hiring.
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