According to the Economic Survey tabled in Parliament on Tuesday, the expected overall annual growth of industry in the 10th Plan (2002-07) at around 8.7 per cent is likely to be short of the targeted growth rate, which could be achieved during the next five-year plan.

Painting a rosy future for the industrial sector, the Survey said the 10.6 per cent growth in the first nine months of the current fiscal was the highest recorded since 1995-96.

"Given the recent performance, however, the Eleventh Plan (2007-2012) target of 10 per cent annual industrial growth appears achievable," the Survey said.

Emphasising the removal of infrastructure constraints, it highlighted power as a key factor for sustained growth of the industrial sector.

Industrial growth would have been even higher had it not been for the relatively disappointing performance of mining and quarrying, electricity, gas and water supply sectors, the Survey said.

It singled out the manufacturing sector as being largely responsible for the impressive growth of the Index of Industrial Production, which stood at 10.6 per cent in the April-November period of this fiscal.

Manufacturing contributed 91.1 per cent to this improved performance and in seven of the eight months of the current year, the year-on-year growth of the sector was in double digits, the Survey said.

The Survey said the growth rates of the mining and electricity sectors continued to lag far behind the overall IIP despite a moderate turnaround in this fiscal compared to the previous year.

Within the manufacturing sector, nine segments with a combined weight of 44.2 per cent in IIP grew at over 10 per cent on an average during April-November 2006, but leather and fur declined by 3.7 per cent, it said.

The investment scenario looked optimistic with rising domestic savings and FDI inflows. India surpassed South Korea in the region to become the fourth largest recipient of FDI this fiscal as per the latest UNCTAD report, it said.

During April-September 2006, total FDI inflow stood at Rs 20,155 crore ($4.38 billion), with the electrical equipment sector retaining the top spot, followed by services and telecommunications, which dislodged transportation to the fourth spot, the Survey said.

On the performances of specific sectors, the Survey said electronics and computer technology continued to do well, with hardware and software registering combined exports of Rs 1,11,700 crore (Rs 1117 billion) in 2005-06.

The auto sector registered a growth of 18.04 per cent with production at 53,94,000 units till September 2006 of this fiscal, while oil marketing companies faced under recoveries, which stood at Rs 33,185 crore (Rs 331.85 billion) in the April-September period this fiscal.

The Survey said central public sector enterprises had a share of 11.12 per cent in the GDP at market prices in 2005-06 and witnessed a cumulative investment of Rs 3,93,057 crore (Rs 3930.57 billion) at end-March 2006.