"India's industrial outlook will remain dire until there are signs of improvement in export prospects," Sherman Chan, an economist with Moody's Economy.com said in a statement, released hours after government data showed 1.2 percent fall in India's February industrial output.
"It's almost impossible for local manufacturers to maintain their previous production levels given the slump in external orders. Exports are unlikely to recover any time soon, as major markets such as the US and Europe are still in bad shape," Chan said.
He, however, said the commitment of the G-20 nations to improve trade finance was a welcome sign.
"The domestic sector may provide some support to local manufacturers. For instance, the fiscal stimulus measures will inject much-needed support to the industrial sector. However, such assistance could at most minimise the damages done by the global downturn," Chan said.
Warning that the foreign investment flow to India is decreasing due to the downturn effect, the economist said: "This will weigh on construction and manufacturing activity."
He, however, said the "tech-savvy" India still remained one of the ideal locations for many global corporations.
"Therefore, India's industrial sector perhaps will not be hurt as badly by the global downturn compared with most other emerging economies," Chan added.
copyright 2009 by IANS.
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