The HSBC India Manufacturing Purchasing Managers' Index (PMI), a measure of factory production, edged up marginally from 51.3 in April to 51.4 in May, pointing to a slight improvement in operating conditions of the firms surveyed.

Activity in the sector expanded for the seventh consecutive month in May. A PMI reading above 50 indicates growth while a lower reading means contraction.

"The momentum in the manufacturing sector improved at the margin, thanks to higher domestic and export order flows," said Frederic Neumann, Co-Head of Asian Economic Research at HSBC.

The survey respondents said that output rose for amid stronger increases in new orders, although there were mentions that growth was stymied by power-cuts and the elections.

"Output growth held steady as frequent power cuts forced firms to accumulate backlogs at a faster pace," Neumann said.

Growth of both total new orders and new export business accelerated during the month, leading to further job creation across the sector, HSBC said.

Indian manufacturers indicated that purchasing activity increased further in May, however output charges increased further.

"Encouragingly, input price pressures eased further, but with output prices still rising the RBI cannot take down its inflation guards," Neumann said.

RBI had increased the key policy rate, repo, three times since Rajan took over as the Governor in September.

RBI's next bi-monthly monetary policy review meet is scheduled for Tuesday.

(Agencies)

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