India’s economic environment has undergone changes due to shifting market conditions, structural adjustments, and the end of the festive season amid global uncertainty. The Manufacturing PMI declined to 55.0 in December from 56.6 in November. Although manufacturing activity continued to expand, a fall in new orders led industrial output to drop to its lowest level in 38 months, according to the S&P Global PMI Index report.
Despite positive demand trends supporting new business and production, growth slowed noticeably in December. Employment growth also weakened, recording its sharpest decline in 22 months. Rising input costs—largely due to geopolitical tensions—put pressure on manufacturers, contributing to the moderation in output.
While domestic demand remained strong, international orders declined, with growth mainly coming from Asia, Europe, and the Middle East. Inventory trends showed divergence: raw material stocks rose sharply, while finished goods inventories fell significantly, marking the fastest inventory drawdown in eight months as companies met current sales.
Input costs rose further due to higher prices of bamboo, chemicals, glass, leather, and packaging. Although manufacturers expect output growth in 2026, overall business sentiment fell to a three-and-a-half-year low. Inflation remained muted, with output price growth at a nine-month low.
