India's private sector growth touched a three-month high in February, driven by a quicker upturn in factory production.

The HSBC Flash India Composite Output Index, which comprises indices for the manufacturing and service sectors, grew to 59.3 in February from 58.4 in the preceding month, according to HSBC Flash PMI data released on Friday.

The seasonally adjusted index, which tracks month-on-month output across manufacturing and services, remained comfortably above the 50.0 threshold, indicating expansion.

"Private sector companies in India welcomed quicker increases in total new orders and international sales during February, which prompted them to recruit additional staff and scale up output," S&P said.

These improvements were accompanied by an intensification of inflationary pressures, with both input costs and selling charges rising at faster rates.

Manufacturing strengthened in February, with the HSBC Flash India Manufacturing PMI rising to a four-month high of 57.5 from 55.4 in January. The HSBC Flash India Services PMI Business Activity Index, meanwhile, showed a marginal decline in growth at 58.4 in February from 58.5 a month earlier.

"...services saw a notable acceleration in new export business, while its domestic orders moderated. Both manufacturers and service providers were optimistic about the future, despite rising inflationary pressures," Pranjul Bhandari, Chief India Economist at HSBC, said.

The service economy outperformed the manufacturing sector in exports, as international orders rose at a substantial pace that was the steepest since August 2025. Manufacturers, however, witnessed the slowest increase in external sales for 16 months.