India's Manufacturing Remains Robust

April 1, 2011
However, manufacturers face steeper increases in input costs and they are increasingly being passed on to output prices.

In a sign of strong growth in Asia's third-largest economy, which has rebounded smartly from the global downturn, the HSBC Purchasing Managers' Index (PMI) remained at 57.9 in March, unchanged from February.

The strong manufacturing numbers "suggest that growth is proving quite resilient despite (monetary) policy tightening and higher energy prices," said Leif Eskesen, HSBC's chief India economist. "However, manufacturers face steeper increases in input costs and they are increasingly being passed on to output prices. In turn, this calls for a further tightening of monetary policy."

In aother report out April 1, India's merchandise exports surged nearly 50% in February on the back of growing global demand. Merchandise exports grew by 49.7% year-on-year during February to $23.5 billion, according to the Commerce Ministry, bringing the total for the April-February period to $208.2 billion.

India's government initially set a $200 billion export target for the fiscal year ending March 31, 2011. But it lifted the goal to $225 billion thanks to a rise in demand for Indian goods such as cotton, gems and petroleum products.

Commerce Secretary Rahul Khullar said India's 2010-2011 exports should touch $230 to $235 billion.

Imports also increased by 21.2% in February to $31.7 billion, creating a trade deficit of $8.1 billion, the ministry said.

India's central bank, which has been the most aggressive in Asia in raising interest rates to curb price rises, last month hiked borrowing costs for the eighth time in a year. The bank warned more rises loomed amid concern about inflation which remains stubbornly above 8%.

Copyright Agence France-Presse, 2011

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