The worries over India's manufacturing activity may be put to rest for a while now.
Manufacturing activity in January rose along at its fastest clip in eight months, fuelled by new order growth, according to a survey released on Wednesday.
The HSBC India Manufacturing Purchasing Managers' Index (PMI), a key measure of factory production, registered 57.5 in January, up from 54.2 in December -- accelerating for the second straight month.
A reading above 50 indicates the sector is expanding while a reading below 50 suggests a contraction.
HSBC attributed the rise to rebound led by restocking and fresh orders.
There has been strong demand from domestic, foreign clients, HSBC said in statement adding that red flags still exist as input cost pressures rose in January compared to last month.
HSBC said the reading pointed to the strongest improvement in Indian business conditions since May 2011.
The news underscores government expectations of an upturn in India's economy after it slowed under the brunt of aggressive interest rate hikes to curb stubbornly high inflation.
"Activity in the manufacturing sector rebounded again in January, led by higher demand from both domestic and foreign clients," said HSBC India chief economist Leif Eskesen.
"The rebound in growth kept backlogs of work growing and employment growth in positive territory," he added.
The PMI data came a day after the government's top economic adviser, Kaushik Basu, said India's growth was at an "inflection point" with the economy poised to speed up in the coming fiscal year.
The government expects economy to grow by around 7 per cent in the current fiscal year to March, down from 8.4 per cent last year.
But a preliminary government forecast for next year projects Asia's third-largest economy will grow between 7.5 and 8 per cent.
With agency inputs
