Industrial growth still remains vulnerable to several domestic factors and external shocks. Infrastructure and energy constraints, decline in demand for India's exports and fragile recovery in investment are the risk factors. The latest lead indicators suggest mixed signals about whether a growth upturn is underway, the survey said.
Decline in profitability, deceleration in the rate of growth of credit to the industrial sector and squeezed margins of corporate sector also moderated the industrial growth.
Another indicator of the industry's weaknesses and vulnerabilities despite being one of the top ten manufacturing nations is India's manufacturing value-added (MVA) as share of GDP, which has remained sticky at around 15%.
Further, lower foreign direct investment inflows in key infrastructure sectors during April-October 2012 at $6.19 billion as compared with $18.66 billion in the year-ago period have further constrained investment.
Sharp decline in natural gas output, subdued performance of the coal sector and slow project implementation in railways, roads and ports also moderated industrial growth.
India has not improved significantly in terms of the ease of doing business and ranks very low in comparison to other industrial peers, it added.