India’s factory activity hits 16-year high in March

India’s manufacturing industry experienced robust growth in March, reaching its highest level in 16 years due to increased demand, Reuters reported on Tuesday. Hiring also saw a significant uptick, marking the strongest rate in six months.

The data is likely to support Prime Minister Narendra Modi’s government ahead of the upcoming general election, as the government has focused on boosting the manufacturing sector to drive economic growth.

The HSBC final India Manufacturing Purchasing Managers’ Index rose to 59.1 last month, the highest since February 2008. This marks the 33rd consecutive month above the 50-mark, indicating growth.

Production and new orders reached their highest levels since October 2020, with exports expanding at the fastest pace in nearly two years. Employment generation in March was the strongest since September, reflecting positive business conditions.

Despite concerns about inflation, manufacturers remain optimistic about future prospects. Input costs increased, but not all were passed on to clients, leading to lower prices charged.

The Reserve Bank of India (RBI) is unlikely to cut interest rates in the near term due to inflation concerns.