By Abhijit Neogy

NEW DELHI (Reuters) - India's manufacturing in January grew at its fastest pace in almost 1-½ years, driven by a sharp rise in new export orders that are supporting a recovery in the industrial sector, a survey showed on Monday.

The HSBC Markit Purchasing Managers' Index (PMI), based on a survey of 500 companies, rose to 57.7 in January, its strongest reading since August 2008 and up from 55.6 in December.

"Any lingering concern that India's manufacturing recovery was tailing off should be well and truly put to rest by this strong release," said Robert Prior-Wandesforde, senior Asian economist at HSBC in Singapore.

Exports continued to rebound, rising an annual 9.3 percent in December to $14.6 billion, their second consecutive monthly rise, although the pace of annual growth was slower than the 18.2 percent registered in November. The export figure, released on Monday, was initially revealed by the trade minister on Jan. 11.

Imports increased by 27.2 percent in December from a year earlier to $24.75 billion while the trade deficit shrunk by a little over 28 percent to $76.24 billion for the April- December 2009 period.

Markets were little moved by Monday's data, with shares down 0.14 percent and the yield on the benchmark 10-year government bond down 1 basis point, given that the figures merely confirmed the increasing momentum of India's recovery from the global downturn.

On Friday, the Reserve Bank raised the cash reserve ratio for banks by a higher-than-expected 75 basis points in an effort to soak up excess liquidity, and ramped up its forecast for GDP growth in the current fiscal year through March to 7.5 percent from its earlier forecast of 6 percent.

The HSBC Purchasing Managers' Index mirrored the positive export performance, with a more-than 5 point jump in the new export orders component, a sign that growth in manufacturing sector is increasingly fuelled by exports.