India’s Business Activity Slows To 41-Month Low In March

India’s economic activity increased at a slower pace in the last three and a half years in March 2026. The composite Purchasing Managers' Index (PMI) fell to a 41-month low of 56.5 in March from February’s 58.9, as per data released by HSBC and S&P Global on March 24.

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The reading is the weakest in the past three and a half years but still indicates growth rather than contraction, as it is above the 50 mark.

Manufacturing And Services See Broad-Based Moderation

The decline was seen in all industries, with a sharp decline in manufacturing activities. Manufacturing PMI registered a decline to 53.8 in March from 56.9 in February, its lowest in over four years, while factory output growth registered its slowest rate since August 2021.

Service sector activities also registered a decline during the month. Services PMI registered a decline to 57.2 from 58.1, its slowest rate of expansion since January 2025.

Figures show that both sectors have registered an expansion in activities, though at a slower rate compared to previous months.

Demand And Orders Growth Weakens

There was a decline in new orders received by manufacturing and service sectors, with a rise in total orders received by companies, though at a slower rate, its weakest rate of increase since November 2022.

The data showed softer domestic demand during the month. At the same time, export orders recorded a sharp increase, reaching the fastest pace on record, supported by demand from Asia, Europe, the U.S., and West Asia.

Rising Costs And Input Pressures

Input cost inflation accelerated in March, reaching its highest level in nearly four years, driven by higher prices of energy, metals, chemicals, and food items, according to S&P Global.

While companies passed on part of the increase to customers, the rise in selling prices remained slower than the rise in input costs, indicating pressure on margins.

Impact Of Geopolitical Developments

Based on the data provided by HSBC, the geopolitical tensions in West Asia, particularly between the U.S., Israel, and Iran, were seen to impact business sentiment and demand conditions.

The business operations experienced a fall in international travel and market uncertainty, resulting in a fall in business demand and an increase in business activity.

Hiring Activity And Outlook

Although there has been a fall in the growth rate, there has been an increase in the employment level as the hiring activity increased at its fastest rate since August 2025, driven by business needs, as per S&P Global.

The businesses maintained a positive outlook for the next 12 months due to factors such as new client enquiries, marketing activities, and business improvements.

According to the latest data, India’s private sector activity continues to grow, but the rate of growth has slowed down due to weakened demand and increased input prices.