India’s Manufacturers Optimistic On Production, Domestic Demand & Investment: FICCI Survey

New Delhi, Jan 20 (KNN) India’s manufacturing sector continues to show sustained growth and optimism, according to the 68th Quarterly Survey on Manufacturing for Q3 FY 2025–26 (October–December 2025) by Federation of Indian Chambers of Commerce & Industry (FICCI).

The survey reflects participation from both large and small and medium-sized enterprises (SME) manufacturers across eight key sectors, with a combined annual turnover exceeding Rs 3 lakh crore.

Production and Domestic Demand

The survey findings suggested all-time high sentiment in the manufacturing sector, with 91 per cent of respondents indicating higher or stable production levels in Q3, up from 87 per cent in Q2. Domestic demand remains strong, with 86 per cent expecting higher or stable orders, boosted further by the recent GST rate cuts.

Capacity Utilisation and Investment Outlook

The survey said average capacity utilisation across sectors is around 75 per cent, indicating sustained activity. 

Sector-wise, utilisation stands at 65 per cent for auto components, 72 per cent for capital goods, 74.5 per cent for chemicals, fertilisers, and pharmaceuticals, 78 per cent for electronics and electricals, 69 per cent for machine tools, 79 per cent for metals and metal products, and 75 per cent for both miscellaneous and textiles, apparel, and technical textiles. 

Manufacturers report steady investment plans over the next six months, though they continue to face challenges such as global trade tensions, labor shortages, raw material constraints, and regulatory hurdles.

Exports, Inventories, and Hiring

Around 70 per cent of respondents expect exports to remain stable or rise in Q3, while about 83 per cent plan to maintain or increase inventory levels. Hiring intentions have also grown slightly, with 38 per cent aiming to expand their workforce, up from 35 per cent in Q3 last year.

Cost Pressures and Finance Availability

Production costs remain elevated, with 57 per cent of respondents reporting higher costs as a percentage of sales, driven by rising raw material, logistics, power, and utility expenses. 

The average interest rate for manufacturers stands at 8.9 per cent, and over 87 per cent report adequate access to working capital and long-term funding from banks.

Sectoral Growth Expectations

Sectoral growth expectations vary, with electronics and electricals projected to see strong growth, while the miscellaneous sector is expected to grow from strong to moderate. 

Capital goods, chemicals, fertilisers and pharmaceuticals, machine tools, metals and metal products, textiles, apparel and technical textiles, and auto components are all expected to experience moderate growth.

Workforce Availability

Most manufacturers (80 per cent) report no issues with labor availability, while 20 per cent indicate a shortage of skilled workers, underscoring the need for continued government and industry-level skill development initiatives.

(KNN Bureau)