India’s manufacturing sector continued to expand in March, but the pace of growth slowed sharply. The Manufacturing PMI slipped to 53.9 from 56.9 in February. Since the 50 mark separates expansion from contraction, the reading still signals growth, but momentum has clearly weakened.
One of the biggest pressures on the sector is rising costs. Input cost inflation surged to a 43‑month high, driven by energy prices, raw material shortages, and global supply chain disruptions. This sharp rise in expenses is beginning to weigh on manufacturers, showing up in the softer PMI print.
Companies are also adjusting their inventory strategies. Pre‑production inventories expanded at the end of the fiscal quarter, though the rate of accumulation eased to a 40‑month low. Even so, the build‑up remained above the long‑run average, with many firms citing efforts to raise buffer stocks. On the other hand, depletion of finished goods inventories was marginal and marked the weakest pace in the current five‑month period of contraction.
Overall, the data suggests that while India’s factories are still in growth mode, rising input costs and global disruptions are starting to bite. The sector remains resilient, but the slowdown in momentum highlights the challenges manufacturers face as they balance expansion with cost pressures.
