A private monthly showed that India's manufacturing activity slowed down in the month of June on account of deceleration in the expansion of orders and output in factories.

The Nikkei India Purchasing Managers Index (PMI) eased to 52.1 in June from 52.7 in the previous month, a statement from index compiler IHS Markit showed. The index, however, remained over the 50-mark, that separates growth from contraction, for the 23rd straight month.

"Gauges of factory orders, production, employment and exports remained inside growth territory, but rates of expansion softened in all cases as domestic and international demand showed some signs of fading," the report said.

A sub-index that tracks output prices dropped to a 45-month low in June, staying in contraction territory for a second straight month even as the rate of increase in input prices remained unchanged.

The ease in prices is likely to keep overall retail inflation in check that hit a seven-month high in the month of May. However, the inflation levels have remained below the Reserve Bank of India's (RBI) medium-term target of 4 percent for a tenth month, which may call for further policy easing by the RBI.

According to the survey, optimism about output over the coming 12 months has fallen, which could mean a fall in job growth in the industry.