India's Output Growth Slows Amid Middle East Tensions

India PMI Data March 2026: Growth Slows Amid Middle East Tensions and Rising Cost Pressures​

Composite PMI Signals Moderation in Private Sector Output​

New Delhi, March 24: India’s private sector growth lost momentum in March as manufacturing and services activity moderated amid geopolitical tensions and rising cost pressures, according to HSBC’s Flash India PMI data released on Tuesday.

The Composite PMI Output Index, which tracks month on month changes across manufacturing and services, stood at 56.5 in March. While the index remained in expansion territory, it indicated a slowdown in the pace of growth compared to previous months.

Weak Domestic Demand Weighs on New Orders​

The data highlighted a notable softening in domestic demand, with new orders increasing at their slowest pace in over three years. This comes despite a sharp and record rise in export orders, pointing to an uneven demand environment.

Pranjul Bhandari, Chief India Economist at HSBC, said that weaker domestic conditions played a key role in moderating overall growth. She also noted that companies faced rising cost pressures but chose to absorb a portion of these increases by compressing margins.

Middle East Conflict and Inflation Add Pressure​

Businesses cited the ongoing Middle East conflict, volatile market conditions, and inflationary trends as key factors affecting growth in March.

Input costs rose at the fastest rate in 45 months, while selling prices increased at the quickest pace in seven months. However, the rise in output prices lagged significantly behind input cost inflation, indicating margin pressure across firms.

Sales Growth Slows to Multi Month Low​

According to S&P Global data, overall sales across manufacturing and services expanded at the slowest rate since November 2022. Both sectors reported softer increases in new business, reflecting cautious demand conditions.

Outstanding business volumes continued to rise for the fourth consecutive month, although the pace of accumulation remained marginal.

Manufacturing Activity Shows Mixed Trends​

Manufacturing sector data showed continued increases in purchasing activity and inventory levels at the end of the fiscal quarter. However, the rate of expansion in both buying activity and stock accumulation eased compared to February.

On the supply side, companies reported a marked improvement in vendor delivery times, suggesting better supply chain efficiency during the month.

Firms Remain Optimistic Despite Near Term Challenges​

Despite the moderation in growth, Indian private sector firms expressed optimism about output prospects over the next 12 months.

Companies attributed their positive outlook to planned efficiency improvements, increased marketing efforts, and a steady pipeline of new client enquiries, indicating confidence in medium term demand recovery.