India's manufacturing sector experienced a notable slowdown in December 2025, as indicated by the HSBC India Manufacturing Purchasing Managers' Index (PMI), which fell to 55.0. This figure is a decrease from 56.6 recorded in November and signals the weakest improvement in the health of the manufacturing sector in two years. The moderation in growth was primarily attributed to softer expansions in new orders, output, and employment. New work orders saw their weakest increase since December 2023, while output levels expanded at the slowest pace since October 2022. Furthermore, the pace of job creation in the manufacturing sector was the lowest in the current 22-month period of employment expansion. Part of the overall slowdown was also due to a softer increase in international orders, with new export orders rising to the least extent in 14 months. Despite this deceleration, the industry largely concluded 2025 in 'good shape', according to S&P Global, as the PMI remained above the crucial 50-mark (which separates expansion from contraction) and its long-run average. Manufacturers anticipate an increase in output during 2026, though overall business sentiment dipped to its lowest in nearly three-and-a-half years due to concerns about competitive pressures and market uncertainty. Input cost inflation remained subdued, contributing to hopes that competitive pricing might attract new business in the coming year.