What Happened
- India's manufacturing and services sectors both accelerated in February 2026, with both indices reaching their fastest pace of expansion in three months, according to S&P Global India PMI data
- The HSBC India Manufacturing PMI rose to 56.9 in February 2026 from 55.4 in January — a four-month high — driven by strong domestic demand and rising new orders
- The Composite PMI (combining manufacturing and services) climbed to 59.3 in February from 58.4 in January, reflecting broad-based economic momentum
- Input cost inflation climbed at the steepest pace in 15 months, pushing selling prices to a six-month high, raising concerns about potential pass-through to consumer prices
- New export orders growth slowed to a 17-month low even as domestic orders remained robust, signalling some softening in external demand amid global trade uncertainties
- Employment expanded at the fastest pace in four months as firms hired to cope with rising workloads
Static Topic Bridges
Purchasing Managers' Index (PMI): Concept and Significance
The Purchasing Managers' Index (PMI) is a monthly survey-based diffusion index that measures the economic health of the manufacturing and services sectors. It is compiled by S&P Global (formerly IHS Markit) in India in partnership with HSBC. Respondents — purchasing managers at private-sector companies — are asked whether conditions improved, deteriorated, or remained unchanged across five components: new orders, output, employment, supplier delivery times, and input stocks. The index ranges from 0 to 100, with 50 as the neutral threshold.
- Above 50: expansion (more respondents reporting improvement than deterioration)
- Below 50: contraction
- India Manufacturing PMI (Feb 2026): 56.9 — four-month high
- India Composite PMI (Feb 2026): 59.3 — combining manufacturing and services
- PMI is a leading indicator (published monthly, early in the following month) and often precedes GDP data releases
- Published by: S&P Global in partnership with HSBC for India
- Indian PMI surveys cover ~400 manufacturing and ~400 services companies
Connection to this news: India's PMI readings consistently above 55 since 2023 signal sustained economic expansion in the private sector, aligning with official GDP growth projections of 6.7–6.8% for FY2026.
India's Manufacturing Sector: Structure and Policy Context
India's manufacturing sector contributes approximately 16–17% of GDP, well below the government's target of 25% under the Make in India initiative (launched 2014). The sector spans traditional industries (textiles, food processing) and high-growth segments (electronics, pharmaceuticals, defence). The Production-Linked Incentive (PLI) scheme — covering 14 sectors with total outlay of Rs 1.97 lakh crore — is the flagship policy aimed at boosting manufacturing output and exports.
- Manufacturing's share of GDP (FY2024-25): ~16–17% (target: 25% under Make in India)
- PLI scheme: 14 sectors, total outlay ~Rs 1.97 lakh crore; launched 2020-21
- Index of Industrial Production (IIP): official monthly measure of manufacturing output; base year 2011-12
- IIP covers: manufacturing (77.6%), mining (14.4%), electricity (8%) by weight
- Strong PMI (56.9 in Feb 2026) supports the RBI's assessment of continued economic momentum
Connection to this news: The PMI's new orders and output sub-indices rising together confirms that manufacturing demand is genuinely strengthening, not just price-driven, reinforcing the case for private capex acceleration.
Services Sector PMI and India's Services Economy
India's services sector — contributing ~55% of GDP — is the dominant driver of economic growth and employment at the formal level. The Services PMI surveys financial services, insurance, real estate, IT/business services, and hospitality companies. India's services PMI has remained in strong expansion territory (above 58) for most of 2024-2025, driven by IT sector resilience, financial services growth, and strong domestic consumption of services.
- Services sector share of India's GDP: ~54–56%
- India Services PMI: consistently above 58 in late 2025 – early 2026
- Composite PMI (Feb 2026): 59.3 — one of the highest globally among major economies
- Key concern from February data: input cost inflation at 15-month high may squeeze margins and filter into CPI
- Employment sub-index rising: consistent with India's formal services employment expansion
Connection to this news: The strong Services PMI reinforces the narrative that India's domestic demand-led growth is intact even as global trade faces headwinds from tariff conflicts, providing a buffer for the overall economy.
Key Facts & Data
- Manufacturing PMI (Feb 2026): 56.9 (up from 55.4 in Jan; four-month high)
- Composite PMI (Feb 2026): 59.3 (up from 58.4 in Jan)
- PMI threshold: 50 = neutral; above 50 = expansion; below 50 = contraction
- Input cost inflation: steepest in 15 months
- Selling price inflation: six-month high
- Export orders growth: slowest in 17 months
- Employment growth: fastest in four months
- Survey conducted by: S&P Global (in partnership with HSBC for India)
- PMI is a leading indicator; published monthly within 7 days of month-end