India's Purchasing Managers' Index (PMI) is projected to stay robust within the 57-59 range during the fiscal year 2026-27 (FY27), with information technology and healthcare emerging as primary growth drivers, according to a report by Brickwork Ratings. The manufacturing sector, led by automobiles, metals, and construction materials, is expected to recover, but this hinges on easing input costs, resolution of the West Asia conflict, sustained government capital expenditure, and investments under the Production Linked Incentive (PLI) scheme.
Services Sector Remains Resilient
The report highlights that India's PMI landscape presents a cautiously optimistic outlook. The services sector continues to demonstrate resilience, underpinning consumption and job creation even as manufacturing activity moderates due to the West Asia conflict and elevated input costs. Composite PMIs have maintained a firm expansionary trajectory, with manufacturing in the 56-58 range and services in the 58-60 range, supported by robust demand conditions.
Index of Industrial Production (IIP) and core sector output, averaging 5-6 per cent and 7-8 per cent year-on-year respectively, signal strengthening industrial production and a gradual narrowing of the output gap. "This procyclical acceleration is driven by increased fiscal spending and optimized capacity utilization across the steel, cement, and refinery verticals," the report stated.
March PMI Slowdown and GDP Alignment
While flagging a slowdown in India's manufacturing activity in March, with the PMI slipping to 53.9, the report noted that the composite PMI remained firmly in expansionary territory. This aligns broadly with the Reserve Bank of India's revised FY27 GDP growth forecast of 6.7 per cent. Record export order growth helped offset softer domestic demand, while the RBI's neutral policy stance and active liquidity support ensured steady credit transmission across sectors.
The report added: "India's PMI landscape pointed to a cautiously optimistic outlook, with resilient services sustaining consumption and job creation even as manufacturing moderated amid the West Asia conflict and rising input costs."
Key Drivers and Risks for FY27
Looking ahead to FY27, the PMI is expected to remain firm in the 57-59 range, buoyed by strong digital exports, robust urban consumption, and expanding trade linkages through India-US and India-EU agreements. Information technology and healthcare are identified as key growth anchors. However, a recovery in manufacturing—led by autos, metals, and construction materials—"hinges on West Asia conflict resolution, easing input costs, and sustained transmission of government capex and PLI-led investment," the report noted.
The overall outlook suggests that while the services sector will continue to support economic activity, the manufacturing sector's performance will be critical for achieving balanced growth. The report underscores the importance of geopolitical stability and cost dynamics in shaping India's industrial trajectory.
