India’s industrial output declined during June but business confidence touched six-month high in India. The Purchasing Managers' Index (PMI) dropped slightly during June to 57.8 from 58.7 recorded during May 2023. The June PMI still marks the second highest factory output in India this year. During the weekend, Indian government reported Rs 1,61,497 crore in gross GST Collections June 2023. The GST collection has remined above Rs 1.6 lakh crore for four months and this indicates strong local business performance. The S&P Global India report indicated that PMI is still strong across different sectors. A PMI reading above 50 points to expansion in factory output.

Exports from India declined slightly in June as compared to May. Inflation has largely remained under control. Indian Central Bank has better control over monetary policy compared to US and European counterparts. India has been dealing with much higher levels of inflation compared to developed Western economies.

The S&P Global report added, “Indian goods producers registered a sharp increase in new work intakes during June and one that was among the strongest seen since February 2021.” As the demand remained strong, the prices at factory door jumped at their best rate in 13 months. The input prices were more or less at the same level as they were during May 2023.

Despite small decline in PMI, Indian markets closed at their all-time highs. The sentiment in Indian stock markets is bullish.

Pollyanna De Lima, Economics associate director at S&P Global Market Intelligence commented, “Presented with buoyant demand, manufacturers seized the opportunity to adjust their pricing strategies. The latest increase in output charges reflected firms' ability to pass on higher cost burdens to customers while maintaining a competitive edge.”

Domestic consumption in India is a strong driver of growth across many sectors. The monsoons are expected to be slightly better than normal and we can expect better agricultural production during the upcoming seasons.