Business Activity Slows to 41-Month Low in March Amid Ongoing Iran Conflict

India's Economic Momentum Slows

Composite PMI Falls to 56.5 in March

Preliminary data released by HSBC on March 24 showed the Composite PMI slipping to 56.5, down from 58.9 in February, the lowest reading in 41 months. Although the index remains above the 50-mark, separating growth from contraction, the sharp decline signals a loss of momentum.

The slowdown was broad-based, with Manufacturing activity weakening sharply, with the PMI dropping to 53.8, the lowest in 54 months. This indicates that factory output and new orders have taken a hit, largely due to softer demand and rising input uncertainties.

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Services activity also moderated, with the PMI easing to 57.2 from 58.1, reflecting a cooling in demand across consumer-facing sectors. The data suggests that the US and Israel war on Iran and broader West Asia tensions are beginning to filter into the real economy, dampening activity across sectors.

Key Indicators

• Composite PMI: 56.5 (March), down from 58.9 (February)
• Manufacturing PMI: 53.8 (March), lowest in 54 months
• Services PMI: 57.2 (March), down from 58.1 (February)

The slowdown marks a shift from the strong expansion seen in 2024 and mid-2025, when the composite PMI remained close to or above 60. Since late 2025, the index has shown signs of moderation, slipping from 59.7 in November to 57.8 in December before stabilising briefly and then dropping sharply in March.

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