Factories stepped up production last month as domestic orders poured in at a faster pace than January, but weak global demand dented export growth, a business survey showed on Friday.
The HSBC Markit manufacturing Purchasing Managers' Index (PMI), rose to 54.2 in February, after falling to 53.2 in January.
The PMI index, which gauges business activity in Indian factories but not its utilities, has held above the 50 mark that divides growth from contraction for almost four years.
Still, data released on Thursday showed economic growth eased to 4.5% in the three months to December, its lowest in nearly four years, cementing expectations for a decade low rate for the current fiscal year to March.
"Manufacturing activity picked up on the back of stronger growth in domestic orders," said Leif Eskesen, HSBC's chief economist for India.
The new orders index rose to 56.3 last month from 55.9 in January but the export orders index fell for the second straight month.
Asia's third largest economy has been hurt by slowing overseas demand and renewed concerns about the euro zone sovereign debt crisis, fuelled this week by an inconclusive Italian election.
The euro zone, India's largest trading partner, has been ravaged by a three year old sovereign debt crisis that has, on and off, threatened to push the global economy into a new downturn.
In addition, elevated inflation, high fiscal and current-account deficits, and a still-weak rupee will dent hopes for a speedy recovery.
The PMI survey showed costs of raw materials grew at a steady pace, while prices charged grew at a faster rate during February, making it harder for the central bank to ease policy to spur growth.