India’s manufacturing activity showed renewed strength in October, with the HSBC Flash India Manufacturing Purchasing Managers’ Index (PMI) rising to a two-month high of 58.4, up from 57.7 in September, a report showed on Friday. 

The data compiled by S&P Global indicates that the country’s manufacturing sector continues to expand at a solid pace, supported by strong domestic demand and easing cost pressures.

The rise in the manufacturing PMI reflects an improvement in business conditions, driven by higher new orders, increased production, and steady employment levels.

According to HSBC’s Chief India Economist Pranjul Bhandari, the recent GST rate cuts have helped boost domestic demand while keeping input costs under control.

She added that both new orders and output remain above the average seen between January and July.

“The HSBC Flash Manufacturing PMI picked up slightly, likely on the back of GST rate cuts, which are supporting domestic demand and curbing cost pressures,” Bhandari said.

However, export-related challenges persist due to the impact of U.S. tariffs, which continue to weigh on new export orders and future business optimism.

“Both new orders and output are above the average January–July levels. However, the drag from US tariffs continues to affect new export orders and future optimism, which remain below the January–July levels,” she mentioned.

Meanwhile, the HSBC Flash India Composite Output Index — which measures the combined performance of the manufacturing and services sectors — fell to 59.9 in October from 61.0 in September.

The seasonally adjusted index still remained well above the neutral 50-mark — indicating continued economic expansion, albeit at a slower pace.

Experts said that the strong rebound in manufacturing suggests continued resilience in domestic demand and industrial activity heading into the final quarter of the year.