FICCI survey finds sustained growth in Indian manufacturing sector

NEW DELHI: A survey conducted by industry body FICCI revealed sustained and continued growth for India's manufacturing sector in the last two quarters of 2023-24 (October-March).

Compared to the previous quarter, October-December, when 73 per cent of respondents had reported higher production levels, in the current January-March quarter, around 87 per cent of respondents expected either higher or the same level of production. 

Responses have been drawn from over 400 manufacturing units from both large and SME segments with a combined annual turnover of over Rs 3.4 lakh crores.

 This upbeat assessment of Indian manufacturing is also reflected in higher-order books.

As per the survey, 85 per cent of the respondents in the current January-March quarter are expecting a higher number of orders compared to the previous quarter. Domestic demand conditions also show optimism.

The existing average capacity utilization in manufacturing is around 73 per cent, which reflects sustained economic activity in the sector, which is more or less the same as reported in previous surveys.

The future investment outlook also looks steady, with over 50 per cent of respondents indicating plans for investments and expansions in the next six months.

On the contrary, the availability of raw materials and their escalating prices, uncertainty in global demand, shortage of skilled labour, market volatility, increased power costs, unutilized capacities, and high bank interest rates, are some of the major constraints that are affecting expansion plans of the respondents, the FICCI survey said.

 Coming to inventories, 88 per cent of the respondents had either more or the same level of inventory in October-December, which is more than that in the same quarter last year. In the January-March quarter, about 84 per cent of the respondents expected higher or the same level of inventory.

As per the survey, the hiring outlook remains stable as close to 40 per cent of the respondents are looking at hiring additional workforce in the next three months.

Many sectors have a sufficient labour force engaged in their operations and are not facing a shortage of labour at factories. 62 per cent of the respondents mentioned that they do not have any issues with workforce availability, and the remaining 38 per cent feel that there is still a lack of skilled workforce in their sectors.