21 Aug 2025 : India’s business activity surged to its fastest pace in at least two decades, according to the latest Purchasing Managers’ Index (PMI) data. The report highlighted strong demand across both manufacturing and services, even as inflationary pressures intensified.
The August PMI reading indicated a robust expansion, with both new orders and output rising at record levels. Economists point out that this marks the highest growth momentum seen since the early 2000s, underscoring India’s strong economic resilience despite global headwinds. The PMI, a key indicator of private-sector activity, captures survey responses from thousands of businesses and is widely tracked by policymakers and investors.
According to S&P Global, which compiles the index, India’s composite PMI reached its highest level since the survey began more than 20 years ago. The data reflects buoyant domestic demand, robust consumer confidence, and steady investment activity. Export demand also contributed to the expansion, with several firms reporting stronger international orders, particularly in IT services, engineering, and pharmaceuticals.
However, the survey also pointed to rising cost pressures. Input prices for raw materials, energy, and wages increased sharply, prompting firms to pass on a portion of the costs to consumers. As a result, output charges rose at the fastest pace in several months. Analysts caution that while inflation remains under control compared to the peaks of 2022, persistent price increases could weigh on household spending if not managed carefully.
Despite these inflationary pressures, the outlook for India’s economy remains optimistic. Businesses surveyed reported confidence in future growth, citing strong government policies, improving infrastructure, and digital adoption as key enablers. Many firms expect to expand hiring and investment in the coming quarters to meet surging demand.
Economists believe that the Reserve Bank of India (RBI) will closely monitor the PMI data while formulating monetary policy. The central bank has kept interest rates steady in recent months, balancing the need to support growth while containing inflation. If price pressures continue to escalate, the RBI may adopt a more cautious approach in the months ahead.
India’s PMI data comes at a time when global economies are grappling with sluggish growth, rising energy costs, and geopolitical uncertainties. The contrast underscores India’s position as one of the fastest-growing major economies, drawing increasing investor attention.
Market experts say the sustained expansion in both manufacturing and services demonstrates India’s broad-based growth momentum. Sectors such as IT, consumer goods, pharmaceuticals, and construction have particularly benefited from the current demand cycle.
Overall, the PMI report confirms India’s robust economic momentum and its resilience in the face of global challenges. The combination of strong domestic demand and resilient exports positions India as a bright spot in the global economy, although rising prices remain a key risk to monitor.
Summary
India’s business activity hit a two-decade high as PMI data showed record growth in manufacturing and services. Strong demand fueled expansion, but rising input costs and higher consumer prices signal growing inflationary pressures.