India’s high-frequency indicators ended the second quarter of FY27 on a firmer footing, with tax collections, manufacturing activity and digital payments showing strength in September, although automobile sales pointed to a widening divergence between passenger vehicles and rural-facing segments.
Gross Goods and Services Tax (GST) collections rose 14.7 percent year-on-year (y-o-y) to Rs 2.04 lakh crore in September, staying above the Rs 2-lakh-crore mark for the third consecutive month. Growth also picked up marginally from 14.3 percent in August.
Manufacturing activity, meanwhile, rebounded sharply from a five-year low, while average daily Unified Payments Interface (UPI) transactions crossed 800 million for the first time.
Automobile sales presented a more mixed picture. Passenger vehicle makers such as Maruti Suzuki, Mahindra & Mahindra and Hyundai reported double-digit growth, but domestic two-wheeler sales at Bajaj Auto and tractor volumes at Mahindra declined during the month.
Taken together, the indicators suggest domestic activity remained resilient at the end of the July-September quarter, though weakness in rural-facing automobile categories and a relatively subdued quarterly manufacturing PMI indicate that the recovery remains uneven.
Manufacturing rebounds
The HSBC India Manufacturing Purchasing Managers’ Index (PMI) rose to 55.1 in September from 52.8 in August, marking the strongest improvement in manufacturing conditions in seven months. A reading above 50 indicates expansion.
The recovery followed three consecutive months of moderation, with the PMI slipping from 54.2 in June to 53.5 in July and a five-year low of 52.8 in August.
New orders increased at their fastest pace since February as demand strengthened for electronics, food, pharmaceutical and textile products. Factory production also recorded its sharpest expansion in four months, while employment returned to growth after contracting in August.
The September rebound, however, was not enough to prevent a weaker quarter overall. Manufacturing PMI averaged 53.8 during July-September, its lowest quarterly average since the corresponding quarter of 2021.
GST growth remains in double digits
Tax collections also remained robust.
Gross GST collections increased to Rs 2.04 lakh crore in September from Rs 1.77 lakh crore a year earlier. Domestic revenues rose 10.1 percent to Rs 1.38 lakh crore, while collections from imports jumped 25.9 percent to Rs 65,525 crore.
The faster growth in import-linked collections meant overseas transactions continued to contribute disproportionately to the increase in overall GST revenue.
“GST collections remain strong, but it’s interesting to see that domestic revenues grew 10.1% compared with almost 26% growth in import GST. This suggests a meaningful part of the headline buoyancy is coming from imports. At the same time, cumulative refunds are up nearly 19%, which is a positive signal for businesses from a liquidity standpoint. Sustained domestic growth will be important to watch from here,” said Pratik Jain, partner, PwC.
Kulraj Ashpnani, partner, Dhruva Advisors, further noted that the “growth in GST collections in September 2026 appears to reflect preparations for the upcoming festive season and a strong push for tax compliance.”
UPI daily transactions cross 800 million
Digital payments continued to expand rapidly, even though headline monthly UPI volumes eased from August.
UPI processed 24.07 billion transactions worth Rs 29.37 lakh crore in September, compared with 19.63 billion transactions worth Rs 24.90 lakh crore a year earlier. Transaction volumes increased 22.6 percent y-o-y, while value rose 18 percent.
On a daily basis, momentum strengthened. Average UPI transactions rose to a record 802.3 million per day from 790.6 million in August and 654.3 million a year earlier.
The average value processed each day also climbed to a record Rs 97,900 crore from Rs 96,194 crore in August.
Autos show a split picture
Automobile sales provided perhaps the clearest indication of the unevenness in consumption.
Maruti Suzuki reported total sales of 2.36 lakh vehicles in September, up 24 percent from a year earlier. Domestic passenger vehicle sales increased 37 percent to 1.82 lakh units, while utility vehicle sales jumped 62 percent.
Mahindra & Mahindra’s overall vehicle sales increased 15 percent y-o-y, with passenger vehicle sales rising 14 percent to 64,092 units. Hyundai Motor India reported a 10.8 percent increase in total sales to 77,916 vehicles.
Commercial vehicles also showed strength, with Tata Motors reporting a 42.4 percent increase in sales to 51,062 units.
Rural-facing categories, however, were substantially weaker.
Mahindra’s tractor sales declined 21 percent y-o-y to 52,100 units, while Escorts Kubota’s volumes fell 16.7 percent. Bajaj Auto’s overall sales increased 5 percent to 5.38 lakh vehicles, supported by a 32 percent jump in exports, but domestic sales declined 9 percent and domestic two-wheeler volumes fell 12 percent.