Private sector growth hits 3.5-year low in March

By ET BureauLast Updated: Mar 25, 2026, 12:28:00 AM IST

Synopsis

India's private sector growth slowed to its weakest pace in over three years in March, impacted by the West Asia conflict dampening demand and output. While international sales reached a record high, rising input costs, including oil and energy, intensified inflationary pressures.

New Delhi: India's private sector growth slowed to its weakest pace in more than three-and-a-half years in March as the West Asia conflict dampened demand and output, even as international sales hit a record high, a private survey showed on Tuesday.

The HSBC Flash India Composite Purchasing Managers' Index fell to 56.5 in March from 58.9 in February and 59.5 a year earlier. The composite PMI combines manufacturing and services indices, with readings above 50 signalling expansion and those below indicating contraction.

"Output growth eased across both manufacturing and services as the energy shock unfolds," said Pranjul Bhandari, chief India economist at HSBC. Manufacturing activity weakened more sharply, with the PMI falling to 53.8 in March from 56.9 in February. Market volatility and consumer uncertainty linked to the conflict led to the slowest rise in factory output since August 2021. The services PMI eased to 57.2 from 58.1.

Inflationary pressures intensified during the month. Input costs, including oil, energy, food, aluminium, steel and chemicals, rose to a 45-month high, while selling prices increased to a seven-month high.

“Cost pressures intensified, but companies are absorbing part of the increase by squeezing margins,” said Bhandari.