The HSBC Purchasing Managers' Index (PMI) for India stood at 52.4 in August, showing a slight decline from 53 in July following a slight moderation in manufacturing activity.
Although there was improvement in operating conditions in August, as output growth was good and companies received good order from domestic and international buyers, the survey noted activity was limited.
However, employment saw a decline for second consecutive month.
Among various sectors, the consumer goods sector performed the best, while capital goods (heavy machinery) sector witness business conditions deteriorated.
''The mood remains positive, too, with firms accumulating inventory in response to stronger demand. However, price pressures remained elevated, despite the slight deceleration seen in input prices. This is likely to keep the central bank guarded against inflation risks, particularly from the pick-up in demand,'' said Frederic Neumann, co-head of Asian Economic Research at HSBC.
Elsewhere, data showed that China's official Purchasing Managers' Index (PMI) slipped in August from July's 51.7. The National Bureau of Statistics also said growth in China's vast manufacturing sector fell from a 27-month high to 51.1 in August.
Germany's manufacturing sector also expanded at the slowest rate in 11 months in August as new orders and output growth weakened, a survey showed on Monday, adding to signs that Europe's largest economy is slowing.
The HSBC PMI is a measure of factory production based on data compiled from monthly replies to questionnaires sent to purchasing executives in around 500 manufacturing companies. Index above 50 shows expansion while index below 50 indicates decline.