(AP) — India’s industrial output grew a brisk 9.7 percent in August from a year ago, but the pace was slower than in July and fell short of expectations, according to government data released Friday.
The slowdown in August — industrial output expanded 12.7 percent in July — came because of a contraction in mining output and sluggish electricity generation, although manufactured output continued to post double-digit growth.
Manufactured output grew 11.1 percent in August compared with 8.5 percent in the same month a year ago. The growth came on the back of sustained domestic demand and a surge in exports, despite fears about rising oil prices and interest rates.
Mining production fell 0.1 percent in August from last year, while the growth in electricity generation slowed to 3.7 percent.
Still, industrial growth averaged 10.6 percent during the April-August period, the first five months of the fiscal year.
The impressive growth in industrial output, coupled with prospects of a good agricultural harvest because of timely rains, will likely help the broader economy maintain the momentum seen in recent years.
India has averaged 8.1 percent annual growth over the past three years, making it one of the fastest-growing economies in the world.
And that growth rate needs help to keep its pace.
India needs more investment from the EU to develop its economy and is wiling to make changes to encourage more foreign involvement, officials said Thursday as both regions laid out plans for a new trade pact.
The nation’s economic growth “provides unique opportunities for strengthening areas of cooperation between Europe and India,” Indian Prime Minister Manmohan Singh said on the sidelines of an EU-India business meeting.
“There are immense opportunities for investments in infrastructure…in manufacturing, in services,” he said.
EU and Indian leaders meet Friday at a special summit to take the first step toward a trade pact that would open both their markets.
Commerce Secretary Ajay Dua said India needs to spend an extra $320 billion to improve its infrastructure over the next five years.
“We are also aware that we do not domestically have resources of this order and that greater global capital, particularly from EU, has to be attracted,” he said.
“We need roughly $50 billion in building our road network through various public-private partnerships,” he told representatives from European and Indian industry. “European investors should find considerable investment opportunities in building our road network.”
India aims to grab some $16 billion in foreign capital every year — half to build up business infrastructure, Dua said. It is on tract to attract $12 billion this year, considerably less than what we need,” he added.
EU Trade Commissioner Peter Mandelson said he was convinced that removing trade barriers would bring new investment and make it easier for businesses in both regions to operate across borders.
“Mutual opening will contribute to economic growth on both sides and also to a stronger political partnership,” he told the conference.
“We should move towards a broad-based trade and investment agreement,” he said. “We are natural partners with complementary economies.”
Mandelson said both should push for a World Trade Organization deal that could create a global rules-based market, but on top of that, they could agree together to eliminate other obstacles to doing business.
“We have a vested interest in a successful outcome of the Doha round of trade negotiations, particularly if the round stays faithful to the promise of making this a truly development round,” Singh said. “As developing countries, we have a special interest in a rule-based multilateralism where might is not right.”
Trade experts from India and the EU have identified government tenders, technical rules, intellectual property rights and antitrust policy as areas that needed to be tackled, he said.
Both sides will formally agree to push forward with a deal at the Friday summit that could see the start of formal negotiations next year with a possible pact by the end of 2008.