The central government has said that it will provide support for the ailing manufacturing sector in the country after data showed that the sector contracted for the first time in five years.

India's Commerce and Industry Minister, Anand Sharma expressed concern over a fall of 3.5 per cent in industrial production in March, compared to a 4.1 per cent increase in February. He also said that the central bank, the Reserve Bank of India (RBI) will offer loans at lower rates to the manufacturers in the country to boost production.

Mr Sharma said that the "slowdown in exports growth in April in the backdrop of the economic crisis in the eurozone is a worrisome development. The government will intervene in sectors which require support."

The fall in industrial output is mainly due to a sharp drop in manufacturing and capital goods. Electrical machinery manufacturing recorded a fall of 43%, while apparel production fell 55%.

According to the latest data released by HSBC, India's headline HSBC Business Activity Index rose to 52.8 in April, compared to 52.3 in March indicating a lower trend rate of expansion of services output.