India’s manufacturing sector expanded to 58.4 in June 2025, up from 57.6 in May, reaching its highest level in 14 months, according to the HSBC India Manufacturing Purchasing Managers’ Index (PMI) data released by S&P Global on Tuesday.
“Robust end-demand fuelled expansions in output, new orders, and job creation. To keep up with strong demand, particularly from international markets, as evidenced by the substantial rise in new export orders, Indian manufacturing firms had to tap deeper into their inventories, causing the stock of finished goods to continue shrinking. Finally, input prices moderated while average selling prices rose as some manufacturers passed on additional cost burdens to clients,” said Chief India Economist at HSBC, Pranjul Bhandari.
Meanwhile, India’s industrial output increased by only 1.2% in May, the slowest growth in nine months, according to government data published on Monday.
Electricity generation dropped sharply by 5.8%, impacted by an early monsoon, marking its first decline in nine months and the largest drop since June 2020. Mining output also fell by 0.1%, its second consecutive monthly decline, Business Standard reports.
Between February and June, the Reserve Bank of India (RBI) reduced the policy repo rate by 100 basis points to 5.5%, following a decline in inflation into the central bank’s target range. This rate cut provided relief to borrowers, sparking expectations of lower EMIs on long-term loans, especially benefiting homebuyers.
The RBI has lowered its retail inflation forecast for the current financial year to 3.7%, down from the previous estimate of 4% made in April.
At the same time, the central bank has maintained its GDP growth forecast of 6.5% for the fiscal year 2025-26. Quarterly growth is projected at 2.9% for April–June, 3.4% for July–September, 3.9% for October–December, and 4.4% for January–March.
The PMI is an economic gauge that measures business activity in a specific sector. It monitors factors like production levels, new orders, employment, supplier performance, and inventory, based on feedback from purchasing managers. A PMI reading above 50 signals sector growth, below 50 indicates contraction, and a reading of exactly 50 means no change in activity.