New Delhi: FICCI’s latest quarterly survey on manufacturing reveals that outlook seems to have improved for the sector in Q3 (October-December 2021-22) after some revival in the first half of 2021-22, and manufacturers are looking forward to the budget to enhance growth and investments in the sector. The percentage of respondents reporting higher production in the third quarter of 2021-22 (October-December 2021-22) was above the sixty per cent mark, around 63 per cent. This was significantly higher or almost double than the similar percentage of last year’s Q-3 quarter (around 33 per cent), noted FICCI. 

FICCI’s latest quarterly survey assessed the performance and sentiments of manufacturers for Q3 (October-December 2021-22) for twelve major sectors namely automotive, capital goods, cement, chemicals, fertilizers and pharmaceuticals, electronics and electrical, medical devices, metal & metal products, paper products, textiles, textiles machinery and miscellaneous. Responses have been drawn from over 300 manufacturing units from both large and SME segments with a combined annual turnover of over Rs 2.7 lakh crore.

The existing average capacity utilization in manufacturing is somewhere in the range of 65-70 per cent, which reflects the sustained economic activity in the sector. Nonetheless, the cost of doing business remains a cause for concern for the sector. High raw material prices, high cost of finance, uncertainty of demand, shortage of working capital, high logistics cost, low domestic and global demand due to supply chain disruptions, excess capacities due to high volume of cheap imports into India, unstable market, high power tariff, are some of the major constraints which are affecting expansion plans of the respondents.

The outlook for exports continues to indicate the expansion path as around 50 per cent of the participants are expecting a rise in their exports for Q-3 2021-22 vis a vis same quarter (Q-3 2020-21) last year. Hiring outlook for the manufacturing sector remains subdued as around 75 per cent of the respondents mentioned that they are not likely to hire additional workforce in the next three months. Average interest rate paid by the manufacturers has reduced slightly to 8.4 per cent per annum as against 8.7 per cent per annum during the last quarter and the highest rate remains as high as 15 per cent. /BI/