The Hong Kong and Shanghai Banking Corporation (HSBC) has recently come out with a survey that reveals a slowdown in India’s manufacturing sector. The manufacturing purchasing managers index (PMI) by HSBC raised alarms as it showed a decrease in the country's manufacturing activities from 58.8 in April to 57.5 in August.
The growth in August was lower than the estimated projection of 57.9 done last month.
“Indian manufacturers registered softer increases in new business and output during August, albeit with rates of expansion remaining elevated by historical standards,” the survey said.
Despite the downward trend, the index remained above the 50-mark that separates growth from contraction, where it has been since July 2021.
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The Indian government has its bets on the expanding manufacturing sector of India. The government, through various schemes and programmes, particularly the Make in India initiatives, aims to contribute 25 per cent to the country’s GDP by 2025. The sector reportedly has the potential to contribute $ 1 trillion by 2025–26. The country also aims to become a global manufacturing hub. Also, by 2030, the sector could contribute $500 billion annually to the global economy.
The moderate downtrend in growth in the sector poses a question mark on the possibility of a 25 per cent target by 2025.
“The Indian manufacturing sector continued to expand in August, although the pace of expansion moderated slightly. New orders and output also mirrored the headline trend, with some panelists citing fierce competition as a reason for the slowdown,” said Pranjul Bhandari, chief India economist at HSBC.
