India's private sector growth rose to an eight-month high in April fueled by robust demand, particularly a surge in foreign orders for manufactured goods, according to a survey, but business confidence showed some signs of softening.
While the latest data underscores a vibrant start to the fiscal year for India's economy, the souring outlook will make it challenging to maintain momentum at a time when US President Donald Trump's tariffs have hurt business sentiment.
The HSBC flash India Composite Purchasing Managers' Index (PMI), compiled by S&P Global, climbed to 60.0, up from 59.5 in March, the strongest pace of combined manufacturing and services growth since August.
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The 50-mark separates growth from contraction.
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Manufacturing growth underpinned the strong performance, with the index rising to 58.4 from 58.1 and reaching a level not seen in a year. The services PMI index also showed solid growth, rising to a four-month high of 59.1 from 58.5 last month.
Higher new business in the services sector and an improvement in goods production and new orders - a key gauge for demand - especially from international clients, were the primary drivers of the overall positive momentum.
"New export orders accelerated sharply, likely buoyed by the 90-day pause in the implementation of tariffs," said Pranjul Bhandari, chief India economist at HSBC referring to Trump's decision to target dozens of countries on April 2 by announcing sweeping tariffs on goods before deferring them for 90 days.
India is trying to position itself as a manufacturing base of choice for the world as China faces high US duties.
The record surge in new export business, the strongest since the index was measured in September 2014, was heavily concentrated within the manufacturing sector which registered the most significant increase in over 15 years.
"As a result, output and employment grew, for both, manufacturers and service providers," Bhandari added.
Amid an intensification of capacity pressures, firms continued to hire additional staff across sectors with goods producers recording the highest employment generation since the beginning of the survey in March 2005.
While input cost inflation trends were mixed, accelerating in the manufacturing sector and decelerating in their services counterpart compared to March, robust demand allowed firms to pass higher costs on to clients.
Selling prices saw a sharper increase led by manufacturers.
Business sentiment was also mixed with strong order inflows improving optimism among goods producers, but softening in the services sector resulting in an eight-month low overall outlook for the coming year. (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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By Sudhi Ranjan Sen and Sherif Tarek
Saudi Arabia and India agreed to deepen energy ties and pursue closer cooperation in areas like tourism and technology as the countries seek to strengthen relations at a time of turbulence for the global economy.
An accord was reached to establish two oil refineries in India through a joint venture between the countries, India’s Ambassador to Saudi Arabia Suhel Ajaz Khan said in a briefing, without giving more details.
The developments come after Saudi Crown Prince Mohammed bin Salman and Indian Prime Minister Narendra Modi met in Jeddah on Tuesday night. India’s leader departed shortly after, rather than staying in the kingdom until Wednesday, following one of the worst attacks on civilians in India’s northern Jammu and Kashmir region in years.
India and Saudi Arabia’s leaders met as both countries look to support their economies in the face of wide-ranging US tariff policies that threaten to stunt growth. India is already facing its slowest economic expansion in four years and Saudi Arabia is forecast to come under renewed pressure from subdued oil prices.
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Deeper ties would stand to bolster stability and energy security for both and follow on years of flirtation between the G-20 nations on partnerships for everything from oil to agriculture and technology.
Saudi Crown Prince MBS had in 2019 pledged $100 billion of investments in India, but only about $10 billion of that has materialised. State-owned oil behemoth Saudi Aramco has also long sought entry into India’s refining sector with little success.
A plan to jointly build a mega complex in western India, for example, hasn’t come to fruition due to challenges over land and a proposal for a stake in Reliance Industries Ltd.’s mega refinery in Gujarat failed to fructify on valuation issues.
It’s unclear if Aramco will be involved in the refineries mentioned by India’s envoy to Saudi Arabia on Tuesday.
Saudi Arabia, the de-facto leader of the OPEC+ producer group, was once India’s largest oil supplier but has seen its share of the market decline as imports from Russia and Iraq increase.
Ahead of his visit, Modi had said the two sides are exploring joint projects in refineries and petrochemicals, according to comments he made to Arab News.
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