Weekly policy watch: PMI data, coal gasification push in focus this week

India's economic calendar this week will track factory and services activity alongside a major energy policy push, offering key signals on growth, inflation and industrial strategy

India’s policy and economic agenda this week will be shaped by business activity data and a major government initiative to strengthen domestic energy production.

 

The focus will be on the release of HSBC Manufacturing PMI on May 4, HSBC Services PMI on May 6 and the Cabinet approval of a ₹37,500 crore coal gasification incentive scheme. Together, these developments will provide important insights into economic demand, sectoral performance, inflation pressures and India’s long-term industrial strategy.

 

Manufacturing PMI to show factory activity trend

 

The HSBC India Manufacturing PMI, to be released on May 4, will provide an important update on the health of the country’s manufacturing sector.

 

 

In March, manufacturing growth slowed sharply, with the PMI falling to 53.9 from 56.9 in February -- its weakest level since June 2022. The decline reflected softer growth in production and new orders as rising costs, weaker market conditions and geopolitical tensions weighed on business activity.

 

Factory output and order growth slowed to their lowest pace in nearly four years. Businesses also faced strong cost pressures, with prices of key inputs such as fuel, steel, chemicals and raw materials rising significantly.

 

The upcoming April data will be closely watched to see whether manufacturing activity has regained momentum.

 

Services PMI to indicate demand resilience

 

The HSBC Services PMI, due on May 6, will offer a snapshot of performance in India’s large services sector.

 

In March, services sector growth eased to a 14-month low, with the business activity index falling to 57.5 from 58.1 in February. While the sector continued to expand, the pace slowed due to rising costs and external uncertainties.

 

Service providers reported a sharp increase in input costs, marking the fastest rise in nearly four years. Despite the slowdown, the reading remained above the long-term average, suggesting that the sector still maintained healthy overall growth.

 

The April data will help assess whether domestic demand remains strong enough to support services growth despite inflationary pressures and global risks.

 

Cabinet to clear ₹37,500 cr coal gasification scheme

 

The Union Cabinet is set to approve a ₹37,500 crore incentive scheme to promote coal gasification projects. The initiative aims to boost surface coal and lignite gasification capacity, reduce import dependence on commodities such as LNG, urea, ammonia, methanol and coking coal and strengthen domestic fuel and chemical production.

 

The scheme supports India’s target of building 100 million tonnes of coal gasification capacity by 2030 and is expected to improve energy security while promoting cleaner use of domestic coal resources.

 

By reducing external dependence and encouraging industrial self-reliance, the policy could become a major pillar of India’s long-term energy strategy.