India’s manufacturing sector continued to show strong momentum in October, supported by goods and services tax (GST) relief, productivity gains, and technology investments, which fuelled higher new orders, output, and purchasing activity, according to a private survey released on Monday.

The HSBC Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 59.2 in October, up from 57.7 in September, remaining just shy of August’s record high of 59.3. A score above 50 indicates expansion, while a reading below that reflects contraction. The headline PMI has now remained in the growth zone for 52 consecutive months, underscoring the sustained resilience of Indian manufacturing.

“New orders increased further at the start of the third fiscal quarter, driven by stronger advertising, buoyant domestic demand, and the positive impact of GST reform. The pace of expansion was sharper than in September,” the report said.

However, the survey indicated that sales growth was primarily domestic, as new export orders rose at a softer pace. Although international demand for Indian goods continued to grow, it was the weakest improvement recorded so far in 2025.

According to Pranjul Bhandari, Chief India Economist at HSBC, “India’s manufacturing PMI accelerated in October as robust end-demand boosted output, new orders, and job creation. Meanwhile, input prices moderated, while selling prices rose as some producers passed on higher costs to consumers. Business sentiment remains positive, supported by GST reforms and healthy demand prospects.”

On the cost front, manufacturers increased their purchases of raw materials and semi-finished goods in October to expand inventories and support production. Buying activity grew at the fastest pace since May 2023, aided by a softening of input cost inflation. The latest increase in expenses was the weakest in eight months, well below the long-term average.

Despite easing cost pressures, output prices rose sharply, matching September’s rate and marking the joint-highest increase in 12 years. Firms cited strong demand, along with higher freight and labour costs, as key drivers behind the price hikes.

In terms of employment, job creation continued for the 20th consecutive month, with a moderate but steady pace of hiring similar to September’s levels. Capacity pressures among manufacturers remained mild, indicated by a small rise in outstanding business volumes. Companies attributed growing backlogs to strong demand.

Looking ahead, manufacturers expressed optimism about future growth, attributing it to GST-driven reforms, capacity expansion, and marketing initiatives. Firms also anticipate steady domestic demand and expect pending contracts to be approved, signalling continued confidence in the sector’s medium-term outlook.