India’s manufacturing sector remains on a strong growth trajectory, with optimism surrounding investment and production outlook, according to the 64th edition of FICCI’s Quarterly Manufacturing Survey (QSM). 

The survey highlights sustained economic activity, stable capacity utilisation, and increasing order books, reinforcing confidence in the sector’s resilience.

FICCI’s QSM indicates that India’s manufacturing sector remains resilient, with a positive investment outlook. However, cost pressures, labour shortages, and regulatory hurdles continue to pose challenges. Addressing these concerns through policy support and industry-driven initiatives will be crucial in sustaining the sectors long-term growth, said economy watchers.

Optimistic Investment Outlook

A key takeaway from the survey is a positive investment sentiment, with 42 per cent of respondents planning new investments and expansions in the next six months. This indicates sustained business confidence despite global uncertainties and domestic cost pressures.

Production Levels Show Improvement

Compared to Q3 FY 2024, when 73 per cent of respondents reported higher production, 83 per cent of manufacturers in Q3 FY 2025 indicated either higher or stable production levels. This marks the second-highest index in recent months, underscoring the manufacturing sector’s steady growth.

Stronger Order Books Reflect Rising Demand

The survey also notes a rise in domestic demand, reflected in higher order bookings. About 83 per cent of respondents expect increased orders in Q3 FY 2025, signalling continued momentum in the manufacturing cycle.

Capacity Utilisation and Expansion Challenges

The average capacity utilisation in the sector stands at 75 per cent, highlighting sustained operational activity.

However, manufacturers face challenges in expanding capacities, including rising raw material costs and high interest rates, add financial pressure; Weak domestic and export demand, create market uncertainties; Skilled labour shortages and complex regulatory processes, delay approvals; Limited access to advanced machinery and high land prices, increasing capital costs and competitive pressures from global markets, impacting pricing and profitability.

Manufacturers hope that policy measures announced in the recent Union Budget will help mitigate some of these concerns and boost growth prospects.

Sector-Wide Assessment

The survey covered eight major manufacturing segments, including automotive & auto components, capital goods, chemicals, fertilizers & pharmaceuticals, electronics & electricals, machine tools, metal & metal products, and textiles & technical textiles. Respondents included both large enterprises and SMEs, with a combined annual turnover exceeding ₹4.7 lakh crore.

Published on February 11, 2025