While the PMI Index rose to 47.2 in June from 30.8 in the preceding month of May, it remained below the 50-point mark that separated growth from contraction.
"India's manufacturing sector moved towards stabilisation in June, with both output and new orders contracting at much softer rates than seen in April and May. However, the recent spike in new coronavirus cases and the resulting lockdown extensions have seen demand continue to weaken," said Eliot Kerr, economist at IHS Markit, the London-based global information provider.
Overall demand received little support from international markets, with new export orders falling for the fourth month in a row. Indian companies continued to cut their input purchasing activity as novel coronavirus led restrictions hampered production, the statement said.
India has 220,114 active COVID-19 cases with 17,400 deaths reported so far.
"Should case numbers continue rising at their current pace, further lockdown extensions may be imposed, which would likely derail a recovery in economic conditions and prolong the woes of those most severely affected by this crisis," Kerr said.
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