The accelerated growth momentum in manufacturing witnessed in the July – September quarter of this fiscal is expected to continue for subsequent quarters, industry body FICCI’s latest quarterly survey on Indian manufacturing has revealed.
In the April – June period of this fiscal, 57 per cent of the respondents reported higher production levels. Against this, in Q2, over 79 per cent of the respondents shared higher level of production, it said.
“This assessment is also reflective in order books, as 80 per cent of the respondents in Q2,” the survey findings said adding that respondents saw a “higher number of orders”. Demand conditions continue to be optimistic in Q2.
The quarterly survey assessed the performance and sentiments of manufacturers for the gone-by quarter across almost 10 sectors that include automotive and auto components, capital goods and construction equipment, cement, chemicals fertilizers and pharmaceuticals, electronics and white goods, machine tools, metal and metal products, textiles, apparels and technical textiles, paper and miscellaneous.
As per the findings, sectors like electronics and white goods, cement, automotive, and machine tools displayed strong growth and are “clear outperformers.” The capital goods and construction machinery, chemicals, textiles, metals, paper were among the sectors that displayed moderate growth, the survey observed.
Capacity utilisation
The existing average capacity utilisation in manufacturing is around 74 per cent, which reflect a sustained economic activity in the sector, the survey said, adding that in the previous quarters, capacity utilisation was 73 per cent.
The future investment outlook has also “improved” and 57 per cent of the survey respondents reported plans for investments and expansions in the coming six months, it said.
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Growth constraints
The survey said that the demand comes out to be the major constraint and limiting factor to realise the true potential of manufacturing sector in India. “Nearly, 40 per cent of the respondents highlighted ‘inadequate’ demand. Whether it is domestic demand or exports, this remains a major limiting factor,” the survey observed. .
“Some other constraints, though not major ones, are high raw material prices, increased cost of finance, logistics, and other supply chain disruptions,” FICCI said in its survey report.