1 Sep 2025 : India’s manufacturing sector is firing on all cylinders as the country’s Manufacturing Purchasing Managers’ Index (PMI) surged to a 17-year high of 59.3 in August 2025, signaling a significant expansion in production, new orders, and business optimism.
The PMI, compiled by S&P Global, measures the performance of the manufacturing sector based on parameters such as output, new orders, employment, supplier delivery times, and inventory levels. A reading above 50 indicates expansion, while below 50 signals contraction.
Surge Driven by Strong Domestic Demand
According to the report, the latest jump in PMI was fueled by robust domestic demand, with new orders growing at their fastest pace since 2008. Consumer goods and capital goods segments led the rally, reflecting an increase in household spending and private investment.
Economists believe this surge signals a strong revival in India’s manufacturing activity after a phase of moderate growth earlier this year. The rise is also being seen as a positive indicator ahead of the festive season, with companies ramping up production to meet anticipated demand.
Export Orders See Strong Growth
Interestingly, export orders also grew significantly, with Indian manufacturers reporting increased shipments to the U.S., Europe, and Middle East markets. This is attributed to global buyers diversifying their supply chains and India benefiting as an alternative to China.
Job Creation and Capacity Expansion
The PMI survey noted higher employment generation, as firms hired additional workers to handle rising workloads. Several companies reported plans to expand capacity and invest in new technology to meet future demand — a sign of long-term confidence in the economy.
Input Cost Pressures Remain
Despite the positive outlook, manufacturers reported moderate increases in input costs, mainly driven by higher prices of raw materials such as metals, chemicals, and energy. However, most firms absorbed these costs or passed them on gradually, avoiding a sharp rise in consumer prices.
Expert Reactions
Industry experts hailed the surge as a sign of India’s manufacturing resilience.
- Raghuram Sharma, Chief Economist at ABC Capital, said, “A PMI reading of 59.3 is a significant milestone. It reflects not just a cyclical recovery but a structural strengthening of manufacturing activity.”
- FIEO President Sanjay Budhia added, “Rising export orders will help India achieve its ambitious $1 trillion export target by 2030.”
Government’s Push for Manufacturing
The government’s Make in India initiative, coupled with production-linked incentive (PLI) schemes, has been credited with boosting industrial output. Economists suggest that if the momentum continues, manufacturing could contribute more significantly to GDP in the coming quarters.
Outlook for Rest of 2025
With interest rates stable and inflation under control, analysts expect manufacturing to remain a strong driver of India’s economic growth through the rest of 2025. The PMI reading reinforces expectations of robust GDP growth in Q3 and Q4.
Summary
India’s Manufacturing PMI jumped to 59.3 in August 2025, the highest in 17 years, driven by robust demand, rising exports, job creation, and capacity expansi