According to Market Watch, “The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index, prepared by Markit, fell to 51.3 from 52.5 in February, but still remained above the 50 mark for the fifth straight month, according to a survey released Tuesday. Readings above 50 indicate expansion; those below that level indicate contraction.”The slight drop follows one of India’s best months for business and manufacturing activity this past February. Confidence in the South Asian economy could fade as analysts predict the latest numbers veer slightly from the road to economic recovery.
Even with the current numbers, however, The Times of India Reports, “The Indian economy is expected to grow 5.5% in 2014-15 on the back of improved performance in industry and services and will inch up to 6% in 2015-16 as external demand improves due to the strength in advanced economies.” Still, the 5.5 percent estimate is a downgrade from the previously predicted 5.7 percent.
The numbers put forth by HSBC India Manufacturing Purchasing Managers’ Index don’t account for foreign orders. Foreign orders were down as well, from 54.9 percent in February to 52.7 in March.
India’s manufacturing industry is known for primarily producing textiles; however, the country is responsible for a host of other exports including electronics.
In Nov. 2013, India was able to secure a deal with cellphone manufacturer Micromax, essentially persuading the electronics-maker away from China. Micromax plans to sell its phones in Russia and Romania, as well as mainland Europe.
Increasingly, companies are looking past the shadow cast by China’s manufacturing industry to Asia’s third largest economy: India.
“India’s government is pushing hardware manufacturing. More importantly, assembling the devices in India could also allow Micromax to make its phones even cheaper thanks to lower wages than in China and incentives from a government keen to kickstart domestic high-end manufacturing,” Quartz reports.
Q2 should give economists a better idea of what to expect from the 2014 Indian manufacturing sector.