"The government should give a leg-up to the industry by providing the right environment including interest rate revision. Performance of the manufacturing sector is expected to be lower even in the first quarter of 2008-09. Some of the major concerns of Indian industry are increase in the prices of raw material and high interest cost that continues to remain unaddressed," FICCI secretary general Amit Mitra said.

Expressing concern over the fall in industrial growth, Ficci said the government needs to take more fiscal measures that would help in reducing the cost of the manufacturers and also stimulate the demand in the economy in the wake of the current global slowdown.

Growth in industrial production during the year fell to 8.1 per cent from 11.6 per cent in 2006-07, mainly due to poor showing of the manufacturing sector that accounts for over two-third of the IIP.

Manufacturing sector managed a poor 2.9 per cent growth, compared to a high of 16 per cent in March 2007, followed by a 3.7 per cent growth in electricity.

Pointing out that high inflation rate was taking toll on industrial production, Assocham president Venugopal N Dhoot said input cost for manufacturing substantially increased and higher fuel costs augmented transportation costs. The combination proved lethal for industrial production.

The government, Dhoot said, should encourage growth of infrastructure sector as the industrial slowdown would have implications for the economic growth in the current financial year.