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India’s manufacturing sector is likely to witness a “slight upturn” in the second quarter on the back of government’s efforts to remove bottlenecks by clearing large projects and a better export outlook, says a survey.
Industry body FICCI in its latest quarterly survey said 47 per cent of the 276 manufacturing units and associations that participated in it expect a slight upturn in manufacturing activity in the second quarter.
“The proportion of respondents who expect to report higher levels of production in the second quarter of 2013-14 has improved to 47 per cent as compared to over 35 per cent in the first quarter,” it said.
This is on account of the government’s efforts to remove bottlenecks by clearing large projects and a better export outlook, it added.
Output of the manufacturing sector, which constitutes over 75 per cent of the index of industrial production (IIP), contracted by 2 per cent in May as against a growth of 2.6 per cent in the year-ago month.
Also, the survey said, proportion of surveyed people expecting any fall in their production level has reduced to 16 per cent as compared to 26 per cent in the last quarter.
However, it said, the demand conditions remain subdued as only 32 per cent respondents reported higher order books for July-September 2013 vis-a-vis the April-June 2013.
Besides, it said, the rupee depreciation has impacted the raw-material cost of manufacturing units.
“On an average, rupee depreciation has increased input cost by 11 per cent for manufacturers,” it said.
It said majority of respondents feel that they are not likely to hire new workforce in the next three months.
The survey has gauged the expectation of manufacturers for second quarter for 12 major sectors like textiles, capital goods, cements, electronics and chemicals.
In terms of capacity utilisation, it said, it remains subdued in manufacturing sector as was the case in the first quarter with 74 per cent respondents not having any plans for capacity-addition for the next six months.
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