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India's private sector growth slows to four-year low in July

Published July 26, 2026 at 10:33 AM UTC

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India's private sector expansion slowed sharply in July, hitting its weakest pace in four years, according to a monthly survey. The HSBC India Composite PMI, which tracks both manufacturing and services, fell to its lowest level since mid-2020, signaling a broad-based deceleration. Economists attribute the slowdown to the cumulative impact of higher interest rates, as the Reserve Bank of India (RBI) raised the repo rate by 250 basis points since May 2022 to rein in inflation. Weaker domestic demand, particularly in consumer-facing sectors, and a tapering of post-pandemic pent-up spending also contributed. The services sector, which had been a key driver of growth, saw a notable moderation in new business and output. Manufacturing, meanwhile, faced headwinds from rising input costs and subdued export orders. For ordinary Indians, the slowdown could mean a softer job market and slower wage growth. Businesses, especially small and medium enterprises, are grappling with higher borrowing costs and reduced demand. On the positive side, inflation has eased from its 2022 peak, and the RBI has kept rates on hold since April, leading some analysts to expect a gradual recovery later this year. However, the global economic outlook remains uncertain, with weak demand from key trading partners adding to domestic challenges. The coming months will be crucial to see if growth stabilizes or faces further headwinds.