"What is heartening to note is that the capital goods sector, which is a guage for investment demand, has shown an improved performance indicating that investment activity is gradually gaining traction due to improved sentiment and a gradual pick up in new business and foreign orders," said Sumit Mazumder, President of CII.
The factory output, as measured by the Index of Industrial Production (IIP), had declined by 2 per cent in February 2014.
Significant uptick in IIP at 5 per cent growth is encouraging and indicates a visible improvement in the business environment, PHD Chamber President Alok Shriram said.
Rebound in the growth of capital goods during the recent months is indicative of a positive turn in the investments cycle, said Shriram.
The effective implementation of the policy environment will not only improve the growth and competitiveness of the industrial sector, but also push economic growth on high road, he added.
"The recovery seems to have stemmed from a rebound in growth seen in the capital goods production, though, the slow growth of the intermediate goods despite the growth in the capital goods production indicates that revival story is not fully complete," Kapoor said.
The rise in industrial production came on the back of on improved mining and manufacturing activity coupled with larger offtake of capital goods.
"It is important that to sustain this growth interest rates are brought down further for stimulating investments and demand and more steps are taken to improve our business regulatory environment," said Ficci Secretary General Didar Singh.