The combined performance of India’s manufacturing and service sectors strengthened during September, although the majority of the HSBC Flash PMI indices retreated from August’s recent highs to signal a modest slowdown, the survey said on Tuesday.

“The manufacturing PMI moderated but its pace of expansion remains healthy. The imposition of the 50% tariff rate by the US on India likely resulted in a slower rise in new export orders over Aug-Sep. This comes on the back of strong frontloading of exports to the US since early-2025. Meanwhile, new domestic orders rose for the last two months, likely on the back of announcements of lower GST rates. All said, the impact of higher tariffs have been somewhat offset by lower tax rates in the data so far,” said Pranjul Bhandari, Chief India Economist at HSBC.

A softer expansion in new business intakes accompanied slower increases in private sector output and employment, with international sales also rising at a weaker pace. Prices trends were more benign as cooler input cost inflation allowed for selling charges to be lifted to a lesser degree. Nevertheless, business confidence strengthened at the end of the second fiscal quarter.

At 61.9 in September, the HSBC Flash India Composite Output Index (a seasonally adjusted index that measures the month-on-month change in the combined output of India's manufacturing and service sectors) came in below August’s multi-year high of 63.2 but still indicated a sharp rate of expansion.

The upturn was the second-best in just over two years. Growth of factory production outpaced that seen for services activity, though rates of increase moderated in each case.