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Business momentum in India’s manufacturing sector improved marginally in April. The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) rose to a 10-month high of 58.2 from 58.1 in March, according to data compiled by S&P Global. A reading above 50 indicates expansion.

The uptick in the headline index was led by the second-fastest upturn in international orders since March 2011. The New Export Orders Index shot up to 57.6 from 54.9 in the previous month. This was accompanied by notable rises in employment and purchasing activity during the month. 

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“With the sole exception of January, new business from abroad grew to the greatest degree in over 14 years at the start of the 2025/26 fiscal year," said the PMI press release. Participants in the PMI survey cited Africa, Asia, Europe, the Middle East and the Americas as sources of demand growth.

So, what is driving India’s exports amid a global economic slowdown and tariff-led uncertainty? There is growing anecdotal evidence of trade diversion and supply chains shifting to India owing to Donald Trump’s higher tariffs on China and on competitor nations, said a Nomura Global Markets Research report. The evidence so far suggests most of the interest from multinationals is in low- and mid-tech manufacturing segments such as electronics (smartphones, PCs, components, semiconductor assembly and testing), textiles (cotton garments, knitwear) and toys. 

Overall, while India’s economy remains vulnerable to a global growth slowdown, there are encouraging signs of relative gains, added the Nomura report dated 30 April.

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On the other hand, some feel that it may be too early to cheer. For instance, economists at Pantheon Macroeconomics caution that the recent strengthening in the two PMI surveys appears to have been driven predominantly by export front-running ahead of potentially more punitive US tariffs. So, these flows are fundamentally unsustainable and prone to an eventual sharp correction. “The problem for the (Indian) economy is that the critical household sector still isn’t firing on all cylinders," they said in a note on 28 April. They feel the post-pandemic recovery in near- and long-term net income expectations has stalled over the past year.

To boost growth amid an improving inflation outlook, the Reserve Bank of India cut the repo rate by 25 basis points to 6% in April. The change in stance suggests scope for further easing and a deeper rate-cut cycle if the global trade war severely dents economic prospects.

Meanwhile, robust demand for Indian goods boosted firms' pricing power, with selling charges hiked to the greatest degree since October 2013. Anecdotal evidence indicated that companies continued to transfer cost increases to clients. Input prices rose at the fastest pace in four months during April, with firms citing higher building maintenance, labour, leather, paper, rubber, steel and transportation costs, said the report. Nonetheless, selling charges rose more quickly than input costs.

As far as business confidence is concerned, the Fuure Output Index improved marginally to 64.6 in April from 64.4 in March. Manufacturers are upbeat on business prospects over the coming year, driven by expectations of demand strength. Marketing efforts, efficiency gains and new client enquiries also underpinned positive forecasts, said the survey report. But these expectations may be put to test in the current global climate.

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