India’s manufacturing sector gained momentum in July, with the Purchasing Managers’ Index (PMI) rising to a 16-month high of 59.1, up from 58.4 in June, according to data released on August 1. This marks the second straight month of the index holding firm above the 58-level, underscoring strong factory activity despite mounting global uncertainties.
The sustained manufacturing resilience comes on the back of robust domestic demand and continued output expansion. It also adds weight to India’s broader economic recovery, which prompted the International Monetary Fund (IMF) to revise its FY26 growth forecast to 6.4 percent, up from 6.2 percent projected in April.
However, India’s growth outlook now faces new challenges. US President Donald Trump’s decision to impose a 25 percent tariff plus penalty on Indian goods, effective August 1, is expected to dampen export momentum and weigh on economic activity. Economists estimate the tariffs could drag down growth by as much as 0.3 percentage points in the current fiscal.
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