India’s Manufacturing Slips to 10-Month Low Amid Tariff Headwinds

Indian manufacturing activity took a sharp downturn in July, as the country’s PMI fell to 48.7—its weakest performance since September 2024. The latest reading points to contraction, ending an eight-month expansion streak and casting a shadow over the industrial sector as trade turbulence grows. Exporters across auto, electronics, and chemicals voiced concern over lackluster globaldemand, while logistic costs mounted in the wake of the new 25% US tariff on Indian goods set for enforcement on August 7. Factory owners are reporting a mix of deferred overseas orders and rising input prices, disrupting working capital cycles and pressuring margins at both large and mid-sized enterprises.

Government officials responded by signaling additional incentives and duty relief for sectors hard-hit by external headwinds. Industry experts note that while the current environment is challenging, medium-term prospects remain underpinned by domestic infrastructure projects and new investments in renewable energy. Notably, Waaree Energies commissioned a landmark 1.8 GW solar module facility in Gujarat to bolster India’s green manufacturing ambitions. Analysts now expect businesses to shift focus towards value-added production and automation as short-term traderisks linger.

Despite short-term pain, domestic consumption and reforms in electric vehicle policy and digital infrastructure are expected to seed manufacturing revival. Companies such as Maruti Suzuki, by amending their business models to include subscription mobility and fleet management, are building new resilience in light of global shocks. All eyes remain on how the government’s next round of incentives and trade talks shape the recovery path for India’s factory sector.