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POLICY AND ECONOMIC REPORT
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Composite PMI

The Composite Output Index is a weighted average of the Manufacturing Output Index and the Services
Business Activity Index. The weights reflect the relative size of the manufacturing and service sectors
according to official GDP data. Because services make up the largest share of India's economy (typically
over 55% of gross value added), the Services PMI carries the dominant weight in the final Composite PMI
calculation.

Recent PMI Outlook for India

? India's private sector saw robust expansion in April 2026, with the composite PMI rising to (58.3
from 57.0 in March. Growth was driven by an upturn in manufacturing and steady service
expansion

? Manufacturing PMI: Rose to 54.7 in April from 53.9 in March.

? Services: Business activity strengthened, with the index rising up to 58.8 in April from 57.5 in
March

Advantages of Using PMI as an Economic Indicator

? Timeliness: It is the fastest major economic data point available. Data for a given month is usually
released on the 1st or 2nd day of the following month, before official economic data is released.

? Economic significance: Central banks, investors, and policymakers use PMI to make informed
decisions about interest rates, investments and economic policies.

? Global reach: PMI data is available for many countries, enabling comparisons of economic
performance across different regions.

Limitations of PMI

? Measures Breadth, Not Depth: The index tells you how many companies are expanding, but not
how much they are expanding. If 100 companies report a tiny 1% increase in orders, the PMI will
shoot up. If one massive company reports a 500% increase but the others remain flat, the PMI
might barely move.

? Focuses on Large Corporations: Survey panels are often heavily skewed toward medium and
large enterprises. It may not accurately reflect the position of the small, unorganized, or local
businesses.

Significance of PMI

S&P Global has used PMI as one of the most important leading indicators for assessing economic health,
business sentiment, industrial activity, and inflationary trends. Its ability to provide early insights into
demand, supply chains, investment activity, and sectoral performance makes it an essential tool for
policymakers, investors, businesses, and economists.

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