India's manufacturing activity climbed to its strongest level in more than 17 years, with the seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) rising to 59.3 in August from 59.1 in July, according to data released by S&P on Monday.

The manufacturing upturn was driven by faster increases in production volumes, robust inflows of new orders, and a sharp rise in purchasing activity, the report said.

However, employment growth slowed to the weakest since November 2024, even as firms continued to add jobs for the 18th consecutive month. Business confidence, meanwhile, recovered from July's three-year low.

In August, new orders rose at broadly the same pace as in July, which was the fastest in nearly five years, supported by buoyant demand and advertising campaigns.

As a result, production growth accelerated to its quickest pace in close to five years.

While new export orders increased at a softer pace, marking the weakest expansion in five months, the rise was still sharp by historical standards. Firms reported fresh business from Asia, Europe, the Middle East and the US.

"The increase of US tariff on Indian goods to 50% might have contributed to the slight easing in new export orders growth, as American buyers refrain from placing orders in the midst of tariff uncertainty," Pranjul Bhandari, Chief India Economist at HSBC, said.