Manufacturing Momentum Grows In October As GST Cuts And Strong Demand Boost Output

India’s manufacturing sector recorded its strongest performance in more than a year in October, powered by resilient domestic demand, lower taxes under the revamped goods and services tax (GST), and increased investment in productivity and technology, according to a private survey released on Monday.

The HSBC India Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, climbed to 59.2 in October from 57.7 in September, the highest reading since early 2023 and well above the 50 point threshold that separates growth from contraction.

Firms reported a sharp increase in new orders, attributing the rise to resilient consumer demand, stronger marketing, and the GST rate restructuring that took effect in late September.

The GST Council’s move to simplify the tax system with a two-slab rate of 5 per cent and 18 per cent reduced levies on several consumer goods, helping stimulate spending ahead of the festive season.

Manufacturers also expressed optimism about future business conditions, encouraged by GST reforms, capacity expansion and upcoming contract approvals.

Employment rose for the 20th straight month as firms added staff to meet growing workloads, although the pace of hiring remained steady compared with September.

While domestic demand remained robust, overseas sales increased at a slower rate, marking the weakest rise in export demand so far this year.

Input cost inflation eased to its lowest level in eight months, allowing companies to ramp up purchasing and inventory accumulation.

However, output prices continued to climb, matching September’s level — the joint-highest in 12 years as strong demand enabled firms to pass on higher costs to consumers.

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