An increase in new export orders that caused the revival in the manufacturing sector made the sector in the country grow at its fastest pace in 18 months in January.

Purchasing Managers' Index of HSBC rose to 57.7 in January, which is the highest rating since August 2008. The index which is based on a survey of 500 companies stood at 55.6 in December 2009.

Robert Prior-Wandesforde, a senior economist at HSBC said about the report that it a 'strong release' which puts down all speculation that the revival in the manufacturing sector in the country is tailing off.

Regarding the increase in index over the previous month, he said that it is consistent with the double digit growth in industrial production. The new order index also increased to 62.9 from December's 60.1.

"The most impressive part of the release was the more than 5 point jump in the new export orders index, which took it to its highest level since October 2007 and indicated that the recovery is by no means dependent on domestic demand alone," he added.

The Reserve Bank of India raised the banks' cash reserve requirements on Friday. The increase was more than expected and the central bank also warned of high inflation pressures that could make it raise interest rates in the coming months.