India's manufacturing activity gauge fell to a four-month low due to slower growth of factory orders and production, and uncertainties regarding the Goods and Services Tax (GST).
The Nikkei India Manufacturing Purchasing Managers' Index (PMI)—compiled by Nikkei and research firm Markit—stood at 50.9 in June, compared to 51.6 in May. A reading below 50 indicates a contraction and a reading above it indicates expansion.
Businesses indicated that growth was held back as a reflection of water scarcity and the impending introduction of the GST.Pollyanna De Lima, Economist, IHSMarkit
The landmark indirect tax regime was launched on July 1 by the Prime Minister and President of India. Businesses, however, retained mixed reactions toward GST due to uncertainty regarding future performances. This led to a slip in overall optimism to a three-month low.
Also Read: GST Will See A Few Win Big And Many Small Businesses Shut Shop: Saurabh Mukherjea
On the brighter side, goods producers recorded an eight-month high in new orders from abroad. Orders in the consumer goods segment also continued to rise strongly.
Payroll and staffing numbers also rose marginally, according to Markit's statement. Input costs were also on the rise due to higher prices of chemicals, rubber, food and plastics.
Also Read: GST To Boost India's GDP; Positive For Rating: Moody's
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