Manufacturing Hits 16-Month High, GST Collections Reflect Economic Pickup

India’s manufacturing sector just posted its strongest performance in over a year, signaling a solid start to the second half of the financial year. At the same time, GST collections saw a 7.5% rise compared to last year, pointing to improving business activity across sectors. Together, these figures hint at a gradually strengthening economy—even as consumer demand remains uneven in parts of the country.

Manufacturing Momentum Picks Up

After months of moderate growth, India’s factory activity is finally seeing a sustained boost. The sector recorded its highest output in 16 months, driven by strong orders, higher production, and export demand. Large and mid-sized manufacturers are reporting increased capacity utilization, with some even exploring hiring expansions.

This trend is particularly encouraging for cities like Nagpur, Indore, and Surat, where small and medium enterprises are integral to the supply chain. The ripple effect of increased factory orders often translates into more work, more employment, and more local spending.

GST Growth Signals Broader Recovery

GST collections rose 7.5% compared to the same month last year, with services, logistics, and consumer goods among the top contributors. While the growth isn’t extraordinary, it’s steady—and that matters for state revenues and public spending. The rise suggests businesses are clocking higher sales and are more compliant, hinting at a healthier economic ecosystem.

However, experts caution against over-interpreting the numbers. Some of the growth could be driven by price inflation rather than a volume boost. That said, a rise in tax collection combined with strong manufacturing is still a positive signal.

What This Means for Smaller Cities

For Tier 2 cities, this economic pulse is crucial. These regions often don’t make headlines, but they power much of the informal economy. A strong manufacturing push means more job opportunities and local trade activity. The GST data also shows that more businesses in these areas are getting formalized and contributing to the tax base.

From auto ancillaries in Aurangabad to textile units in Bhilwara, there’s cautious optimism—but also a desire for policy consistency and credit support to maintain the momentum.

Conclusion

India’s economy may not be in overdrive, but it’s clearly building traction. With manufacturing output at a 16-month high and GST inflows on the rise, the signs are promising. For businesses and consumers in India’s heartland, the coming months could bring a much-needed lift—if this early momentum holds