At 51.1 in February, unchanged from January reading, which was a 4-month high, the seasonally-adjusted Nikkei India Manufacturing Purchasing Managers' Index (PMI) -- a composite single-figure indicator of manufacturing performance – pointed to the second consecutive monthly improvement in business conditions across the sector.

A reading above 50 represents expansion while one below this level means contraction. "The Indian manufacturing economy edged further in the right direction during February, eking out modest gains in new orders and output," Pollyanna De Lima, Economist at Markit and
author of the report, said.

However, a faster expansion in new business inflows failed to lift growth of output and workforce numbers were left broadly unchanged again, the monthly survey noted.

"Although businesses saw a stronger rise in new work, data implied that this was partly driven by price reductions," Lima noted.

On the jobs front, Nikkei noted that February data highlighted broadly unchanged levels of employment across the Indian manufacturing sector. Anecdotal evidence indicated that firms held off hiring amid an increasing degree of cost consciousness in the face of relatively soft demand conditions.

"Goods producers continue to benefit from lower crude oil prices in global markets, which put brakes on inflationary pressure. In light of these numbers, RBI has scope to loosen monetary policy to spur the economy," Lima said.

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