NEW DELHI: India’s private sector in March is expected to have grown at its slowest pace in more than three years as market disruptions and energy shocks due to the Iran war dampened domestic demand and pushed up costs, a private survey said on Tuesday.
HSBC’s flash India Composite Purchasing Managers’ Output Index (PMI), compiled by S&P Global, plunged to 56.5 in March, down from the final reading of 58.9 in February. The March reading was the lowest since October 2022, when it was 55.5. The index was above 50, a mark that separates growth from contraction, for 56 months straight.
Flash PMI is an advance indication of the final Manufacturing, Services and Composite PMI data for a month; it is usually released a week before the final PMI indices are released. Flash PMI is typically based on around 90 per cent of total PMI survey responses received each month, and all responses are used in the final release.
Companies surveyed said unstable markets, inflationary pressures and uncertainty caused by the US-Israeli war on Iran weighed on economic activity in March.
“Output growth eased across both manufacturing and services as the energy shock unfolds. Softer domestic demand weighed on new orders, which rose at the slowest pace in more than three years, despite a record surge in new export orders,” said Pranjul Bhandari, chief India economist at HSBC.
The HSBC Flash India Manufacturing PMI also fell to a four-and-a-half-year low of 53.8 in March from 56.9 in February. The March figure — a weighted average of new orders, output, employment, suppliers’ delivery times and stocks of purchases indices — was the lowest the index has been since September 2021, when it was 53.7.
The HSBC Flash India Services PMI Business Activity Index fell to 57.2 in March, down from 58.1 in February, the lowest since January 2023, when it stood at 57.2.
The slowdown was pronounced in the manufacturing sector, with firms saying the Iran war had disrupted markets, pushed up inflationary pressures and dampened demand as uncertainty grew among clients and consumers. As a result, factory output grew at its slowest pace since August 2021.
The service sector reported the weakest expansion since January 2025, with companies citing disruptions to international travel and the impact of US-Israel strikes and Iran’s retaliatory attacks.
New orders eased across both sectors, with collective sales rising at the weakest pace since November 2022.
In contrast, international sales rose at a record pace in March, with service providers leading the expansion.
Input costs for private companies rose at the quickest pace in close to four years, with prices rising for a range of items, including aluminium, chemicals, electronic components, energy, food, iron ore, leather, oil, rubber and steel, the survey noted.
“Cost pressures intensified, but companies are absorbing part of the increase by squeezing margins,” Bhandari added.
Although companies absorbed most of the extra costs, they still raised their own prices at the fastest rate in seven months.
“Price pressures were more intense in the service economy than in the manufacturing industry during March. This was the case for both input costs and output charges,” the survey said.
Hiring activity picked up in March, with employment generation quickening to the fastest pace since August 2025. “Qualitative data showed that confidence in the outlook for business activity, pending orders and pipelines of new work underpinned hiring.”
S&P Global compiles Flash PMI data from responses to questionnaires sent to panels of around 400 manufacturers and 400 service providers. The final manufacturing PMI for March will be released on April 2, while the services and composite PMI figures will be released on April 6.
Source: Business Standard
