Week in Numbers: Tracking India’s Economic Pulse

India’s private-sector activity slowed in March as rising energy costs and geopolitical tensions weakened sentiment. The HSBC Flash India Composite PMI fell to a three-and-a-half-year low of 56.5 from 58.9 in February.

Output growth eased across both manufacturing and services amid the energy shock. Softer domestic demand weighed on new orders, which grew at the slowest pace in more than three years, even as new export orders surged to a record high. Cost pressures intensified, though companies absorbed part of the increase by squeezing margins.

The sharpest slowdown was among goods producers, who reported weaker production alongside rising inflationary pressures. The HSBC Flash India Manufacturing PMI fell to a four-and-a-half-year low of 53.8 in March, from 56.9 in February.

Service providers also reported a softer expansion in business activity, with the HSBC Flash India Services PMI easing to a 14-month low of 57.2, from 58.1 in February.

Price indicators pointed to intensifying inflationary pressures across the private sector. Input costs rose at the fastest pace in nearly four years, driven by higher prices for metals, chemicals, electronic components, energy, food, and other raw materials. Firms absorbed a significant share of these additional cost burdens.

Flash PMI readings have tended to overestimate final readings in recent months. On average, the flash Composite PMI over the past 11 months has been 0.6 points higher than the final reading.

Total capital expenditure by private companies is projected to decline 16.5% to ₹9.55 trillion in the next financial year starting April, from ₹11.44 trillion in 2025-26, according to a survey by the National Statistics Office. Enterprises typically report conservative expenditure estimates for the following year, and these projections should be interpreted with caution, the statistics office said.

The manufacturing sector accounts for the largest share of intended investment in 2026-27 at 44.4%, followed by the electricity, gas, steam and air-conditioning supply sector at 14.9%. In 2025-26, these sectors accounted for 50.2% and 9.0% of capital expenditure, respectively.

The estimated number of unincorporated establishments increased to 79.2 million in 2025 (January–December) from 73.4 million in 2023–24 (October–September), reflecting growth of 8.0%, according to the Annual Survey of Unincorporated Sector Enterprises.

The sector employed about 128.1 million workers in 2025, adding more than 7.45 million jobs compared with 2023-24. Emolument per worker rose 3.9% to ₹146,550.

Gross value added grew by 10.9% at current prices to ₹19.92 trillion, driven by a 16.8% rise in trade, followed by 8.5% growth in manufacturing and 7.4% in other services. Unincorporated non-agricultural establishments refer to entities not registered under the Companies Act.

Net foreign direct investment into India remained negative for the fifth consecutive month in January, reflecting moderating gross inflows, continued repatriation by foreign investors, and outward FDI. Net FDI outflow stood at $1.39 billion in January, compared with $492 million in December. Repatriation remained elevated at $4.92 billion, though lower than $5.98 billion a month earlier, while outward FDI stood at $2.14 billion. Gross FDI inflows moderated to $5.67 billion from $8.52 billion in December.

Net FDI during April–January, however, remained positive at $1.66 billion, compared with $2.16 billion in the same period last year. Gross FDI inflows during the first 10 months of the fiscal year rose to $79.32 billion from $69.18 billion a year earlier.

 
The Indian rupee depreciated in real effective terms in February, reflecting a decline in nominal effective terms and relatively lower inflation compared with major trading partners. The 40-currency trade-weighted real effective exchange rate (REER) index fell to a near 12-year low of 94.05 in February, from 94.82 in January. The rupee appreciated 1.1% against the dollar in February, following the announcement of an interim trade deal between India and the US. 

India’s crude oil basket averaged $111.93 per barrel in March (as of March 26), sharply higher than $69.01 in February and $72.47 per barrel in March last year.

Renewable energy generation, including large hydroelectric projects, rose 21.3% year-on-year to 25.30 billion units in February, driven by a 31.5% jump in solar output to 16.98 billion units. Wind generation increased 23.3% to 5.66 billion units, while output from large hydro projects rose 9.9% to 7.66 billion units. Total electricity generation, including thermal and nuclear sources, increased 2.3% year-on-year to 145.00 billion units. Renewables accounted for 22.7% of total generation, up from 19.2% a year earlier.

Foreign exchange reserves fell to a 10-week low of $698.35 billion as of March 20, primarily due to a sharp decline in gold prices. Total reserves fell by $11.41 billion during the week, with gold reserves declining by $13.50 billion to $117.19 billion. Foreign currency assets rose $2.13 billion to $557.70 billion.

 Summer crop area fell 2.3% year-on-year to 4.27 million hectares as of March 20. Rice, which accounts for over 40% of the total summer crop area, fell 2.8% to 2.79 million hectares. Pulses rose 17.9% to 0.41 million hectares, while oilseeds fell 0.8% to 0.47 million hectares. The summer crop season in India falls between the rabi and kharif seasons.

Pre-monsoon rainfall has improved after a weak start, with cumulative precipitation for March 1-27 at 27.2 mm, 5% above the long-period average of 26.0 mm. Reservoir storage levels, though declining, remain well above historical norms. As of March 27, water levels in 166 reservoirs stood at 85.43 billion cubic metres, or 47% of their total live capacity — 11% higher than a year earlier and 21% above the 10-year average. These reservoirs are typically replenished during the southwest monsoon.

Coming up:

• Mar 30: Index of Industrial Production for February
• Mar 31: Government finances for April-February
• Apr 1: GST collections for March
• Apr 2: HSBC India Manufacturing PMI for March 

Tailpiece
The government has cut excise duty on petrol and diesel by ₹10 per litre to ease the impact of the sharp rise in crude oil prices on oil marketing companies. If sustained for a year, the move could reduce excise duty collections by about ₹1.5 trillion in 2026-27.