US Israel Iran War: In March 2026, the private sector of India expanded at its weakest and slowest pace in the last three years. The downfall was attributed to dampened domestic demand even though the count of international orders stayed at a record high.
Compiled by S&P Global, the HSBC’s flash India Composite Purchasing Managers’ Index plummeted to 56.5 in March against the final reading of 58.9 in February. The primary reason was market instability and consumer uncertainty stoked by the ongoing Middle East crisis. Interestingly, the downturn was the sharpest in the last 18 months suggesting a notable loss of momentum even though a reading above 50 signals expansion.
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US Israel Iran War-Manufacturing Sector Takes A Beating
India’s manufacturing sector took the brunt with its Purchasing Managers’ Index reading sliding from 56.9 to 53.8, reflecting a low of four-and-a-half years. The services industry of the country that accounts for the majority of India’s gross domestic product also lost the ground with the PMI easing from 58.1 to 57.2.
Last quarter, the GDP growth rate of India slowed down to 7.8 percent from 8.4 percent in the previous quarter since private investment and government spending cooled. Input costs related to food, aluminium, steel, oil, energy and chemicals rose to their fastest pace since June 2022; inflationary pressures intensified while selling prices climbed to a high of seven months.
According to market analysts, cost pressures have intensified and companies are left with no option but to absorb part of the increase by squeezing their profit margins.
Why is India Volatile?
India, as the world’s third-largest oil importer, sources approximately 90 percent of its crude and about half of its natural gas requirements from other countries, exposing it to crude shocks. As Iran has blocked the Strait of Hormuz, crude oil prices have significantly soared over 40 percent since February 28, 2026 – the day the US Israel Iran war started.
Now comes the big question – would factory output growth finally outlive expectations in near future?
