Activity in the country’s manufacturing sector lost further momentum in March, slowing to a seven-month low as local restrictions weighed on the sector prompting firms to shed jobs, a survey showed on Monday.The IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) fell from 57.5 in February to a seven-month low of 55.4 in March. The 50-point mark separates expansion from contraction. The survey is compiled from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers. But the latest reading was indicative of a substantial improvement in the health of the sector that outpaced the long-run series average.The surge in Covid-19 cases in recent weeks has added to the uncertainty, though policymakers have allayed concerns saying India is much better prepared to deal with the pandemic and vaccination was proceeding at a brisk pace. Top policymakers have said they were sticking to the economic projections of double-digit growth for now.There is growing anxiety that the fresh surge in cases which has prompted local lockdowns may hurt the manufacturing sector which is scripting a recovery after being hit hard by the Covid-19 induced lockdown last year.“With Covid-19 restrictions expanded and lockdown measures re-introduced in many states, Indian manufacturers look set to experience a challenging month in April,” said Pollyanna De Lima, economics associate director at IHS Markit.A research by ratings agency Crisil said, initially concentrated in Maharashtra, new cases are slowly dispersing to other states, which have seen some dip in mobility towards end-March. So far, though, economic impact remains minimal, with localised restrictions. Maharashtra, the worst impacted state, has introduced somewhat stringent restrictions that will temper mobility and contact-based services, the Crisil report said.De Lima said PMI survey participants indicated that demand growth was constrained by the escalation of the Covid-19 pandemic, while the rise in input buying was curtailed by an intensification of cost pressures.Business confidence waned in March. While some firms foresee output growth in the coming 12 months, the vast majority predicted no change from present levels. Where optimism was signalled, this was commonly pinned on hopes that COVID-19 controls would ease, the survey showed.Employment declined in March, taking the current sequence of job shedding to a year.