Manufacturing Activity Rebounds in October: GST Cuts Lift Sentiment
Issue: To report on the recovery of India’s manufacturing sector in October 2025, identifying the factors driving the surge in factory output and overall positive sentiment.
Facts:
- India’s factory activity is measured by the HSBC Manufacturing Purchasing Managers’ Index (PMI).
- The PMI reading for October 2025 rose to 59.2, up from 57.7 in September. A PMI reading above 50 indicates expansion in activity.
- The GST rate rationalisation was implemented in late September.
Decision:
Manufacturing activity saw a significant rebound in October, with the PMI rising sharply, reflecting a boost from festive-season demand and the government’s GST rate rationalization.
Key TakeDowns:
- Strong Expansion: The PMI reading of 59.2 indicates a solid expansion in factory activity and is the fifth time the index has been above the 58-mark in the past seven months.
- Sentiment Boost: The improvement suggests that the industrial sector began the third quarter (Q3 FY26) on a solid footing, with the GST cuts acting as a major stimulus by improving affordability and demand.
- GDP Outlook: Although the central bank expects overall growth to moderate later, India’s outlook remains brighter than previously projected, with major international agencies revising their growth forecasts upward (IMF to 6.6%, World Bank to 6.5%).
- Resilience: The continued strong performance signals resilience in the manufacturing sector despite rising geopolitical uncertainty.
Source :- Money Control