India's Manufacturing Sector Surges Despite Economic Slowdown In Developed Countries: FICCI Survey

The latest quarterly analysis by the Federation of Indian Chambers of Commerce and Industry (FICCI) shows significant growth momentum in India's manufacturing sector for the second quarter of fiscal 2023-24.

This momentum is notable as it comes even amidst a global slowdown in developed countries. The survey forecasts that this upward trend will persist in upcoming quarters.

In the first quarter (April-June), about 57 per cent of respondents reported a rise in production. This number climbed to over 79 per cent in the second quarter (July-September).

Additionally, 80 per cent of the surveyed respondents reported an increase in orders, indicating optimistic demand conditions.

This survey encompassed responses from more than 380 manufacturing units across ten major sectors, representing a collective annual revenue of over Rs 4.88 lakh crore.

In terms of capacity addition and utilisation, there's a marginal increase to 74 per cent in average capacity utilisation, indicating sustaining economic activity.

Regarding investment outlook, there's a positive shift, with 57 per cent of the respondents considering new investments and expansion plans within the next half year, marking a slight increase from the previous survey.

On Constraints and Inventories, the survey identifies demand as a major constraint, with more than 40 per cent of the respondents citing inadequate demand as a major hurdle.

Other challenges include escalating raw material costs, rising financial expenses, and disruptions in the supply chain. In the second quarter, about 85 per cent of respondents reported either higher or the same levels of inventory compared to the previous quarter.

In terms of exports, hiring and interest rates, the survey found that export performance improved, with 48 per cent of the surveyed units experiencing increased exports in the second quarter, a significant rise from 33 per cent in the first quarter.

The hiring outlook remains stable, with 38 per cent planning to hire additional workforce in the next three months. Additionally, 59 per cent of respondents reported a marginal increase in interest rates over the previous quarter.

On sectoral growth and production cost, the survey identifies electronics and white goods, cement, automotive, and machine tools as outperforming sectors.

In contrast, others like capital goods and construction machinery, chemicals, textiles, metals, and paper showed moderate growth.

"The cost of production as a percentage of sales for manufacturers in the survey has risen for 58% of respondents compared to 77% of respondents for the previous quarter. Nonetheless, high raw material prices and high energy costs are the two main factors contributing to the high production costs," FICCI said, CNBC-TV18 reported.

On workforce availability, the survey finds that a large majority, 82 per cent, of the respondents didn't face any significant workforce availability issues. However, 18 per cent did express concerns regarding the scarcity of skilled labor in their respective sectors.