India's Manufacturing Growth Slows to Three-Month Low in May

India's manufacturing sector experienced a slowdown in May 2025, with the HSBC India Manufacturing Purchasing Managers' Index (PMI) dropping to 57.6 from 58.2 in April, marking the weakest growth in three months, according to a report by S&P Global. Despite the decline, the PMI remained above the 50-mark, indicating continued expansion, though at a reduced pace. This slowdown has been attributed to rising import costs triggered by new U.S. tariffs under the Trump administration, which have increased input prices and disrupted supply chains.

New U.S. tariffs under President Trump have pushed up the cost of imported materials, making life tougher for Indian factories. These higher costs—now at a five-month peak—are forcing companies to charge more for their products to stay afloat. While demand within India remains strong, exports are taking a hit as global trade gets shakier. Consumer goods, like everyday household items, are still doing well, but bigger industrial and machinery products are growing more slowly.

• India’s Manufacturing Slows in May as U.S. Tariffs Bite, PMI Dips to 57.6
• Factory Growth Eases to 3-Month Low Amid Trade Tensions, PMI at 57.6
• India’s PMI Slips to 57.6 in May, Still Outpaces China and Japan

Factories are still hiring to keep up with orders, though they’re adding jobs at a slightly slower pace than before. Looking ahead, manufacturers are hopeful about the next year, but they’re a little worried about rising costs and trade disruptions. "increase in input costs could pose challenges if global trade tensions persist," said Pranjul Bhandari, HSBC’s Chief India Economist. Still, she pointed out that India’s factories are holding up better than many others around the world.

Compared to other countries, India’s 57.6 PMI score is a standout. For example, China’s PMI was 49.5 and Japan’s was 49.0—both showing their manufacturing sectors are shrinking. India’s strength comes from solid local demand, but some experts think recent export boosts might fade if U.S. tariffs get stricter.

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To keep things on track, factory owners and government officials are working to strengthen local markets and make supply chains more reliable. Despite the challenges, India’s manufacturing sector is still a bright spot, and with the right moves, it could keep growing strong.