The Indian manufacturing industry is expecting growth during the second half of the current calendar year, though there may be a slight drop in growth rates in the second quarter, said a new survey.

"Even though the recent hike in policy rates by RBI may have an impact on industry’s growth trajectory, business sentiment remains positive and industry members expect the growth momentum to remain strong in the next two quarters," said Confederation of Indian Industries (CII) Director General, reacting to the findings of CII's latest ASCON survey.

The survey, which is based on interactions with more than 350 respondents from various manufacturing industry associations, found that out of 110 sectors covered by the survey, 27 sectors are expected to register excellent growth rate of more than 20 percent, 30 sectors are expected to record high growth rate of 10-20 percent, and 42 sectors are expected to record moderate growth rate of 0 to 10 percent.

It added that only 11 sectors are expected to be in the negative zone in the quarter July-September 2010. During the fourth quarter, According to the survey participants, the fourth quarter of the current calendar year (October-December) would be better than the the third quarter (July-September) in terms of more sectors recording excellent and high growth rates.

During the fourth quarter and 32 sectors expect to record excellent growth, 40 sectors expect high growth while the number of sectors which the number of sectors recording moderate and negative growth is expected to decline to 32 and 6 respectively.

The CII survey found that sectors that are expecting to grow at an excellent rate include—automotive, electronics & consumer durables, ball & roller bearing and forging. 

Other sectors like tractors, electric fans, machine tools are also expected to perform fairly well in the next two quarters, it added.

To give a push to the manufacturing sector, the survey participants suggested a slew of measures including early implementation of GST, retaining the present levels of CENVAT and excise rates, and corrections in inverted duty structures and simplification of taxation procedures and laws.  

The survey also added that the government needs to address issues like rise in the cost of raw material, Infrastructure bottlenecks, threat of Chinese imports, and inadequate credit supply to enable the industry maintain higher growth momentum.

According to latest official figures, manufacturing sector output in June fell to 7.3 percent compared to 8 percent in the period ago, raising concern that manufacturing sector growth momentum could be somewhat losing steam.