According to the latest data released, the manufacturing sector in Indian has expanded after recording a three-month low in January, 2013.

The HSBC India Manufacturing Purchasing Managers' Index (PMI) rose to 54.2 in February after touching 53.2 in January, which was its lowest level in three months. The index stood at 54.7 in December. A rating of more than 50 shows expansion while a rating of below 50 shows contraction. The comprehensive index measures overall manufacturing activity in the country.

Analysts said that the country's manufacturing sector strengthened during the month mainly due to strong growth in domestic orders and an increase in the international markets for Indian exports. HSBC chief economist for India & ASEAN Leif Eskesen said that the manufacturing sector grew due to strong orders in the domestic Indian market.

The data showed that about 29 per cent of the companies studied recorded higher level of new orders while just 14 per cent recorded a fall in the level of orders. The report also said that Indian manufacturers also recorded an increase in exports due to increased demand for global clients.

The report also said that the rate of inflating during the month was robust. "Inflation pressures, however, remain firm, with input cost inflation holding steady and inflation of output prices picking up. The numbers underscore that the room for monetary policy easing is limited, even with progress on fiscal consolidation,"  said Eskesen.