West Asia crisis impact: Manufacturing PMI drops sharply to near 4-year low of 53.9 in March 2026

Manufacturing sector activity slowed to its lowest level in nearly four years in March 2026, dragged down by the impact of the war in West Asia on costs, demand, and new order levels, according to a survey of private sector companies.

Also read: West Asia war updates on April 2, 2026

The HSBC India Manufacturing Purchasing Managers’ Index (PMI) — a measure of overall conditions based on new orders, output, employment, supplier delivery times and stocks of purchases — fell sharply from 56.9 in February to 53.9 in March 2026, marking the lowest reading since June 2022. A reading above 50 denotes expansion, while a reading below that level indicates contraction.

“Growth in India’s manufacturing industry took a step back in March as cost pressures, fierce competition, heightened market uncertainty, and the war in the Middle East all contributed to softer increases in new orders and output,” the report stated. “Firms also faced an intensification of cost pressures, the steepest since August 2022.”

The report went on to say that the two largest sub-components of the PMI — new orders and output — rose at the slowest rates since mid-2022.

“Anecdotal evidence showed that growth was curbed by challenging market conditions, cost pressures, and the war in the Middle East,” it added. “March data saw input prices increase to the greatest extent in over three and a half years. Aluminium, chemicals, fuel, jute, leather, fabric, oil, rubber, and steel were some of the items reported to have increased in price.”

According to Pranjul Bhandari, Chief India Economist at HSBC, firms seem to currently be absorbing a large part of the increase in input costs, keeping output prices “relatively contained”.

On a positive note, the report said that Indian manufacturers in March 2026 saw the strongest expansion in external sales since last September, with gains seen from customers in Australia, Brazil, Canada, mainland China, Europe, Japan, West Asia, Türkiye and Vietnam.