India's Manufacturing Weathers US Tariff Storm, Gains Momentum

Statistics culled from the HSBC Manufacturing Purchasing Managers’ Index (PMI) for April show that India performed far better than Asian rivals China, South Korea, Vietnam, and Malaysia. 

The HSBC-PMI, a high-frequency economic indicator, tracks the health of the manufacturing and services sectors by monthly interview-based surveys of private sector business executives. The survey collects responses on indicators, including new orders, output, employment, and inventories.

Compared to the PMI from March, which stood at 58.1, the April PMI has inched upwards to 58.2 for India. This is a 10-month high for Indian manufacturing, and well above the long-run average.

Rishi Shah, partner at Grant Thornton Bharat, said, “The robust PMI readings exceeding 58 for consecutive months signal a manufacturing ecosystem that's not merely surviving global headwinds but thriving amid them."

“India's manufacturing sector is at a fascinating confluence of cyclical strength and structural opportunity,” Shah added.

China’s manufacturing PMI has fallen from 50.5 in March 2025 to 49.0 in April, showing contraction. Vietnam’s manufacturing PMI has plummeted from 50.5 in March to 45.6 in April, the sharpest drop among the Asian giants.

South Korea’s index has also contracted from 49.1 in March to 47.5 in April, while Malaysia experienced a slight drop in manufacturing PMI from 48.8 in March to 48.6 in April.

"Our trade facilitation measures, lower tariff hits from the US, helped us. But frankly, it is the sustainability of the domestic market that kept demand within the broader industry robust," said Industry Ministry officials.

"India is a US$ 3.4 trillion economy that is growing at a faster rate than the rest of Asia. So, the demand for goods will keep growing. Industrial demand is a part of this huge market demand," said officials.

Factor Behind PMI Optimism

A relatively smaller rate of Trump tariffs imposed on India, compared to its Asian competitors and peers, enabled Indian manufacturers to attract more new export orders. India’s GDP also grew at the fastest rate since June 2024.

Both these macro factors resulted in a surge in purchasing activities and heightened economic expectations.

A Commerce Ministry official told The Secretariat, “Despite the tariffs imposed by the US, India’s export momentum remains strong. Reforms undertaken by the government, revival of domestic demand, and conscious supply chain diversification — all helped, as is evident in the April PMI figures.”

“Sectors like auto components, pharmaceuticals and refined petroleum are withstanding the global headwinds better than the labour-intensive sectors like textiles, gems and jewellery, which are facing a profit squeeze,” said the official.

Sustaining Momentum A Challenge

A steady high future expectation of the purchasing managers in the industry is indeed good news. However, challenges remain if one weighs the PMI numbers with India’s IIP (Index of Industrial Production) growth rate. In 2024-25, India’s IIP growth was the lowest in four years, at 4.0 per cent.

Logistic gaps and a lack of adequate regulatory reforms continue to affect industry performance and exports. Addressing domestic bottlenecks is paramount to increasing the scale of production.

A lot will depend on the Indo-US negotiations for a bilateral trade deal. Only a successful completion of the deal, along with a reduction in structural inefficiencies, can provide India with a platform on which the country can capitalise in the long run.

The real test for India will be to sustain the momentum indicated in the PMI optimism in the early part of the financial year.