India's manufacturing sector recorded its 24th straight month of growth, strengthening the case for higher interest rates to curb price gains.
The Purchasing Managers' Index stood at an unchanged 57.9 in March from February, when it accelerated at the fastest pace in three months, according to HSBC Holdings Plc and Markit Economics.
The index at 50 plus indicates an expansion, an HSBC release said.
According to the release, consumer demand in India remained strong, which posed inflation risks. This threat of price spike remained despite the most aggressive rate hikes among the major economies in Asia.
India's manufacturing inflation rate was up 1.19 percentage points in February from January and the highest in 10 months.
"The momentum in India's manufacturing sector held up well in March, suggesting that growth is not an immediate concern," a report by Leif Eskesen, an economist at HSBC in Singapore, said. "This calls for further tightening of monetary policy to tame inflation pressures," he added.