The industry's concerns were due to GDP growth coming in at 4.7 per cent in the third quarter ended December, 2013. Core sector expansion also slowed to 1.6 per cent in January.
"What is especially worrisome is that growth remains in the sub five per cent level for the fifth consecutive quarter as sub-optimal output of the mining and manufacturing sectors continue to plague the economy," CII Director General Chandrajit Banerjee said.
"It will erode some of the cautious optimism which was starting to become visible over the last two months," he said.
The Indian economy grew 4.7 per cent in the third quarter of this financial year mainly due to improved performance in the agriculture and services sectors.
"The GDP growth has disappointed and added to concerns on achieving the full year target of 4.9 per cent," Ficci President Sidharth Birla said.
Given the performance in the first nine months and GDP growth of 4.9 per cent projected by the Central Statistics Office (CSO) in its advance estimates for this financial year, the economy must expand 5.7 per cent in the fourth quarter ending March, 2014.
"Manufacturing sector is bleeding with a compression in demand and low consumer confidence. It must be lifted. Only then will investment take place," Assocham President Rana Kapoor said.
The manufacturing sector declined 1.9 per cent in the third quarter as against a growth of 2.5 per cent a year ago. The output of the sector contracted 0.7 per cent in the first nine months.
"Policy makers should consider initiatives to step up investments from the private sector and raise funds through the public-private partnership model by making concession agreements attractive and defining exit modes," FIEO President M Rafeeque Ahmed said.
"The GDP growth is disappointing as the industry was anticipating higher growth in the second half of the current financial year," PHD Chamber of Commerce President Sharad Jaipuria said.
Meanwhile, poor performance of coal, petroleum refinery products and natural gas pulled down the core sector growth to 1.6 per cent in January from 8.3 per cent in the same month a year ago.
On the core sector performance, Assocham Secretary General D S Rawat said: "It implies that infrastructure deficiency has further widened in the current fiscal".
"The issues linked to the pricing of gas and coal, problems associated with the power distribution policy and continued monopoly of public sector in coal production need strong policy action," he added.