MUMBAI: India's factory output climbed to a six-month high in July on strong demand, a survey showed Monday, easing pressure on the central bank to cut rates when it meets this week.
Japanese media group Nikkei said its purchasing managers index (PMI), formerly carried out by banking giant HSBC, increased to 52.7 points in July from 51.3 a month before.
A reading of more than 50 points suggests industrial expansion while anything below indicates contraction, according to the survey, which is a key barometer of economic health.
"This (growth in PMI) reflects stronger increases of new orders and output. Furthermore, the sector was also boosted by the quickest expansion in export orders since February," wrote Markit economist Pollyanna De Lima in the report.
Indian Prime Minister Narendra Modi has made reviving Asia's third-largest economy a priority since coming to power in May last year, introducing a number of reforms aimed at boosting demand and investment.
The Reserve Bank of India (RBI) has cut interest rates three times this year to aid the pickup, which saw India's economy outperform China's for the first three months of 2015.
The government would like a further snip to the benchmark repo rate when the central bank meets on Tuesday.
But RBI governor Raghuram Rajan has said any further reduction would have to wait until the inflationary effect of annual monsoon rains is known in a couple of months time.
"The positive PMI number will add to the central bank's view that a status quo on rates might be the correct call," Arun Singh, senior economist at Dun & Bradstreet, told AFP.
India's industrial activity hit a two-year peak of 54.5 in December.
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