Indian manufacturing sector growth expected to continue: FICCI survey

The future investment outlook has also improved as compared to the previous quarter as over 57 per cent of respondents reported plans for investments and expansions in the coming six months.

New Delhi: Indian manufacturing has accelerated through the second quarter of 2023-24 and is likely to continue for the subsequent quarters of the financial year 2023-24, notwithstanding the slowdown in developed nations, industry body FICCI‘s latest quarterly survey revealed.

The industry body’s latest quarterly survey assessed the performance and sentiments of manufacturers for the July-September 2023-24 quarter for ten major sectors — 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.

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It sought responses from over 380 manufacturing units from both the large and SME segments with a combined annual turnover of over Rs 4.88 lakh crores.
The existing average capacity utilization in the Indian manufacturing sector is around 74 per cent, slightly higher than the 73 per cent recorded during the previous quarters.

The future investment outlook has also improved as compared to the previous quarter as over 57 per cent of respondents reported plans for investments and expansions in the coming six months. This is also a slight improvement over the previous survey.

In terms of major constraints, demand is a limiting factor to realise the true potential of the manufacturing sector in India, with over 40 per cent of respondents highlighting this as a significant constraint.

“Whether it is domestic demand or exports, this remains a major limiting factor. Some other constraints, though not major ones are high raw material prices, increased cost of finance, logistics, and other supply chain disruptions are some of the major constraints which are affecting expansion plans of the respondents,” finds the FICCI survey.

The table below gives the average capacity utilization for various sub-sectors of manufacturing: On the export front, performance seems to be better than in previous quarters as over 48 per cent of the respondents reported higher exports in July-September 2023-24 as compared to 33 per cent in Q1 2023-24.

“However, further improvement in export demand is required in the light of the country’s growth aspiration,” FICCI said.

Further, the hiring outlook, according to the survey, looks stable with around 38 per cent of the respondents looking at hiring additional workforce in the next three months.

“Most sectors have sufficient labour force engaged in their operations and are not facing a shortage of labour at factories. While 82 per cent of our respondents mentioned that they do not have any issues with workforce availability, the remaining 18 per cent feel that there is still a lack of skilled workforce available in their sector,” FICCI noted.