India’s manufacturing sector plunged to a nine‑month low in growth this October, sliding from a robust 8.2% in the prior quarter to just 0.4%. Output across manufacturing, mining, and energy all registered sharp declines — manufacturing fell from 4.8% in September to 1.8% in October. The disappointing numbers came despite recent reductions in the Goods and Services Tax (GST), a measure intended to stimulate domestic consumption and cushion the blow of U.S. tariffs.
While GST‑related tax revenue held steady, signaling some uptick in consumer spending, the boost was not strong enough to counteract a collapse in export demand. According to Pranjul Bhandari, chief India economist at HSBC, U.S. tariffs played a major role: “The new export orders PMI fell to a 13‑month low,” and business confidence dropped sharply in November.
Bhandari warned the GST stimulus may be losing effectiveness and predicted the tariff headwind could further suppress growth in coming quarters. Still, some analysts remain cautiously optimistic. They argue that India’s manufacturing sector demonstrated resilience and believe GDP could rebound next year, with forecasts around 7% growth in 2026.
In a related development, Indian Commerce Secretary Rajesh Agarwal said New Delhi expects to finalize the first stage of a bilateral trade deal with the United States by the end of 2025. That agreement could reduce or even eliminate tariffs on both sides — a move that many believe could revive export demand and help restore manufacturing momentum.
For now, though, India’s factories are under pressure, and weaker global demand may continue to weigh on output unless new trade relief arrives soon.
