Amid increased inflationary pressures, India's factory activity remained steady in September, even though it expanded at its slowest pace in the last five months, according to an economic tracker.
The latest S&P Global Purchasing Managers' Index (PMI) report revealed that positive business operating conditions increased business confidence to a nine-month high.
According to the report, India's seasonally adjusted PMI was 57.5 in September, slightly down from 58.6 in August.
S&P Global considers any readings above 50 as growth, while below this mark indicates a contraction of business activities.
"India's manufacturing industry showed mild signs of a slowdown in September, primarily due to a softer increase in new orders which tempered production growth. Nevertheless, both demand and output saw significant upticks, and firms also noted gains in new business from clients across Asia, Europe, North America and the Middle East," said Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence/
De Lima added: "Manufacturers held a strongly positive outlook for production, as they expect demand to strengthen over the course of the coming 12 months. Upbeat forecasts continued to drive job creation efforts and initiatives to replenish input stocks."
It should be noted that this is for the 27th consecutive month that India's PMI has crossed the 50-mark which signals positive growth in the country's business environment.
Input costs rose mildly in September at the weakest pace in over three years - as participants noted lower prices for aluminium and oil.
On the other hand, strong demand spurred companies to raise their selling prices. The output charges index rose, driven by higher labour costs, and the rate of increase was above its long-run average, indicating more inflation worries.
"However, while robust demand was supportive of production growth, it added to price pressures in September. The solid increase in output charges signalled by the PMI data, which occurred in spite of a notable retreat in cost pressures, could restrict sales in the coming months," added De Lima.
Earlier in August, while addressing the BRICS Business Forum Leaders' Dialogue in Johannesburg, Prime Minister Narendra Modi said that despite global challenges, India has emerged as the fastest-growing economy and will soon become a $5 trillion economy.
"Despite a shaky world economy, India has emerged as the world's fastest-growing major economy. India will soon become a $5 trillion economy," Modi said in his address.