Rates, rupee hurt Indian manufacturing - minister

By Rajkumar Ray and Surojit Gupta

NEW DELHI (Reuters) - A strong rupee and high interest rates are responsible for a slowdown in India's manufacturing growth, which the government hopes to reverse with new industry initiatives, junior industry minister Ashwani Kumar said.

India's economic growth would remain above 8 percent despite a global slowdown and record oil prices, Kumar, junior minister for Industrial Policy and Promotion, told Reuters.

"The hardening of the rupee has adversely impacted our exports, which account for a major chunk of manufacturing," he said in an interview.

"The high interest rate burden which has hit the consumer durables industry is responsible for a decline in manufacturing."

The rupee rose more than 12 percent against the dollar in 2007 to its strongest levels in almost 10 years.

Industrial output grew at its weakest annual pace in six years in March, data showed on Monday, knocking the rupee to a one-year low and fanning speculation the Reserve Bank of India may hold off tightening policy further in its fight against soaring inflation.

Kumar said a government push to boost investment and technology in leather, textiles, food processing and electronic hardware would help reverse the slowing trend in manufacturing.

"As soon as interest rates soften and there is a general pick-up in the economy, we will be able to reverse the trend."