Industrial output growth unexpectedly had slowed to 4.4 percent in September from a year ago, led by a decline in capital goods production.
India's imports growth in October dipped to 6.8 percent to $27.7 billion from a year ago, the slowest since September 2003, Trade Secretary Rahul Khullar told reporters.
Analysts said a slowdown in non-oil import growth, which remained steady even during the global recession, is an indication of easing industrial expansion and demand in the economy, expected to grow at 8.5 percent this fiscal year.
"The imports growth has slowed down despite rupee appreciation, confirming earlier apprehensions that there could be a slowdown in industrial demand in the economy," said N.R.Bhanumurthy, an economist at the National Institute of Public Finance and Policy, a Delhi-based think-tank.
He forecast industrial output growth to moderate to 8-9 percent this fiscal year, from an earlier average growth of 13-14 percent seen in the early months of the year.
The rupee has gained 3.3 percent year-to-date mainly due to a surge in capital inflows by foreign funds in the stock and debt markets, totalling about $39 billion, data published by the Securities and Exchange Board of India shows.
However, despite a slowdown in imports and a pick-up in exports, Khullar cautioned that global crude prices could rise soon, but that he did not expect the trade deficit to surpass $135 billion in 2010/11.
The trade deficit for October stood at $9.7 billion compared with $9.12 billion in September, while exports rose an annual 21.3 percent to $18 billion, Khullar said.
Analysts say industrial output growth has been affected by the hike in interest rates and inflation, leading to a slowdown in demand for imported raw material and machinery.
India's exports are expected to touch $200 billion this fiscal year, growing at about 15 percent. (Reuters)
