India’s private sector activity expanded at its slowest pace in nearly three-and-a-half years in March, as easing domestic demand and rising input costs weighed on overall economic momentum.
According to preliminary data released by S&P Global, the HSBC Flash India Composite PMI Output Index fell to 56.5 in March from 58.9 in February. This marks the weakest rate of expansion since October 2022, although the index remained above the 50 mark that separates growth from contraction.
The deceleration was led by the manufacturing sector, where output growth slowed sharply amid global uncertainties and persistent inflationary pressures.
The manufacturing Purchasing Managers’ Index (PMI) declined to 53.8 in March from 56.9 in the previous month—its lowest level in four-and-a-half years. The manufacturing output index also eased to 55.1, indicating softer production activity.
The services sector, while still relatively resilient, also showed signs of moderation. The business activity index slipped to 57.2 from 58.1 in February, registering its slowest pace of growth since January 2025.
Businesses cited weaker domestic demand, heightened market volatility, and elevated input costs as key factors behind the slowdown. Ongoing geopolitical tensions in West Asia also contributed to the cautious business environment.
New order growth weakened across both sectors, with overall demand expanding at the slowest rate since November 2022. However, external demand remained a bright spot, as export orders rose at the fastest pace on record, supported by strong demand from Asia, Europe, the United States, and West Asia.
Meanwhile, inflationary pressures intensified significantly during the month. Firms reported the steepest increase in input costs in nearly four years, driven by rising prices of energy, metals, chemicals, and food items.
The data suggests that while India’s private sector continues to grow, the pace of expansion is losing momentum amid a challenging global and domestic economic backdrop.