The HSBC manufacturing PMI -- a composite indicator that gauges the factory output and operating conditions in the manufacturing sector -- showed that the country posted a 53.7 growth in November, up from 52.9 in October, beating the analysts’ expectation of 53.1.
The index has remained above 50 -- indicating growth -- for over three and a half years.
The data showed that the manufacturing activity was boosted by an increase in new orders, indicating a quick recovery, but the country is far away from the robust growth rates it recorded in the 2000-2006 period.
The new orders increased for the 44rd successive month, and the new orders sub-index rose to a six-month high of 55.9 in November from 54.9 registered in October. The overall export orders depicted an upward movement and expanded in their fastest pace since July.
"The manufacturing sector gained momentum thanks to a strong pick up in new orders, which lifted output growth," said Leif Eskesen, an economist at HSBC.
The manufacturing sector recorded its weakest growth rate in nine months in August. The survey also showed that the input and output prices recorded sharp growth in November.
"Inflation picked up again as higher raw material prices increased input costs for firms and they had enough pricing power to pass these on to end consumers due to the firm demand conditions," Eskesen said.
Although HSBC report was not an indication of India’s wholesale price inflation which recorded a 7.5 percent growth in October, it could put pressure on the headline inflation rate.
The high rate of inflation, which, according to the Reserve Bank of India, is much above its comfort levels of 5 percent, has forced the central bank to keep the interest rates unchanged in its latest policy review meeting. However, it cut cash reserve ratio to 4.25 percent in October.