India's annual infrastructure output grew 6.7 percent in June from a year ago, government data showed on Tuesday, its fastest pace in seven months.
The growth in output compares with an upwardly revised 4.3 percent year-on-year growth in May. During April-June, the annual output growth was 5.2 percent, data showed.
Infrastructure output, which comprises eight sectors such as coal, crude oil and electricity, accounts for nearly 40 percent of India's industrial output.
India has also requested Japanese and South Korean steelmakers to step up their investments by building new plants to produce high-grade automotive steel.
India mainly imports the high-tensile steel from Japan and South Korea. However, demand for the auto-grade metal is rising in India as companies such as Hyundai Motor Co ramp up their production to make the country a manufacturing and export hub for small cars.
The Indian government will encourage Japanese and South Korean companies to start greenfield projects in the country, Steel Secretary Aruna Sharma told Reuters in an interview, without giving details.
"Japanese companies can come through joint ventures or independently because India is becoming an auto manufacturing hub so the requirement of auto-grade steel is going to go up," Sharma said.
Consultants IHS Markit has forecast that India will become the world's third-largest carmaker by 2020, up from fifth-largest currently.
Sharma also said state-owned Steel Authority of India Ltd and ArcelorMittal, the world's biggest steelmaker, were "fine-tuning" the terms of their agreements for a $1 billion automotive steel plant in India.
Billionaire Sajjan Jindal's JSW Group has already tied up with Japan's JFE Holdings to produce 2.3 million tonnes of auto-grade steel.