BENGALURU, March 2 (Reuters) - India's factory activity expanded at its fastest pace in four months in February as strong domestic demand drove new orders and production, although export growth cooled to its slowest rate in nearly a year-and-a-half, a survey showed on Monday.
The overall result suggests India's economy is expected to remain resilient this quarter after posting 7.8% growth in October-December, helped by a 13.3% rise in manufacturing. For the full fiscal year ending in March the South
Asian economy is expected to grow 7.6%.
HSBC India Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 56.9 in February from January's 55.4, but undershot a preliminary estimate of 57.5. A PMI above 50 signals expansion.
"India's final manufacturing PMI reflected an acceleration in manufacturing activity in February. Output expanded at a faster rate for a second month, supported by stronger domestic orders," said Pranjul Bhandari, chief India economist at HSBC.
"However, growth in new export orders continued its slowing trend that began in mid-2025, somewhat restricting employment creation in the manufacturing sector."
New export orders grew at the slowest pace in 17 months, suggesting U.S. tariff uncertainty remains despite a recent trade deal with India.
The survey was taken between February 9 and February 23 after U.S. tariffs on Indian goods were slashed to 18% from 50%. Last week President Donald Trump announced new global tariffs following the Supreme Court's move to quash some levies.
In contrast, new orders - a key gauge for demand - surged at their strongest pace since October while production volumes increased at the quickest rate in four months, helped by efficiency gains, solid demand and technology investment, firms said.
Input cost inflation remained moderate and unchanged from January but manufacturers raised their selling prices at the fastest rate in four months as strong demand allowed them to pass on increased costs.
Employment increased to a four-month high but only marginally. Just 4% of firms reported hiring while most made no staffing changes.
Confidence about the year ahead improved to a four-month high, indicating a robust economic growth outlook despite poor external demand.
(Reporting by Anant ChandakEditing by Shri Navaratnam)
