Manufacturing to remain subdued in Q4: FICCI
Updated: Mar 11, 2013 05:26:49pm
New Delhi, Mar 11 (KNN) India's manufacturing output is likely to remain subdued in the fourth quarter of the current financial year due to sluggish demand and high input costs, according to a survey conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI).
While upturn was seen in sectors such as leather, textiles, food products and cement, major segments such as automotive and capital goods are expected to witness sluggish growth in the quarter ending March 31.
The report also stated that 36 per cent of respondents expected a higher level of production in the fourth quarter of 2012-13, while 20 per cent expected a fall in output.
The demand conditions remain subdued but some improvement is witnessed in the fourth quarter of the current financial year as compared to the previous quarter, FICCI said.
The quarterly survey gauged the expectations of manufacturers for January-March period for major sectors such as textiles, capital goods, metals, chemicals, tyres, cement, electronics, automotive, leather and footwear, machine tools, food, ceramics and textiles machinery.
"Responses have been drawn from 327 manufacturing units from both large and small and medium enterprises (SME) segments," FICCI said.
According to the survey, manufacturers were looking at optimal utilisation of existing capacities rather than any fresh investments. The current average capacity utilisation as reported in the survey was around 74 per cent for manufacturing.
A majority 76 per cent of the respondents were not likely to hire new workforce during the next three months. This proportion has evidently increased when compared to the previous survey which showed that around 70 per cent respondents did not expect to hire new workforce in the coming months.
“This clearly indicates that investment will not pick up at least in the near future. Subdued investment sentiments are also reflected in the expected performance of the capital goods sector,” the survey report said.
With regard to inventories, around 30 per cent respondents said they were carrying more than their average levels of inventories and another 50 per cent maintained their average levels of inventories.
Notably, higher than average inventory levels have been reported particularly in sectors such as automotive, capital goods, metals and textile machinery; whereas, sectors like leather, cement and textiles have reported less than their average levels of inventories.
The manufacturing sector, according to the FICCI survey has suggested that they address issues such as availability of raw materials at lower prices, adequate power supply, availability of cheap finance and monetary policy intervention to hasten a revival in industrial growth.
Significantly, small and medium enterprises (SME) play an important role in the development of a country. There are around 26 million MSME units in India, of which 13 million are SMEs. SMEs contribute nearly 45 per cent share of manufactured output, accounting for 40 per cent in overall exports of the country and providing employment to about 32 million people. (KNN/SD)
While upturn was seen in sectors such as leather, textiles, food products and cement, major segments such as automotive and capital goods are expected to witness sluggish growth in the quarter ending March 31.
The report also stated that 36 per cent of respondents expected a higher level of production in the fourth quarter of 2012-13, while 20 per cent expected a fall in output.
The demand conditions remain subdued but some improvement is witnessed in the fourth quarter of the current financial year as compared to the previous quarter, FICCI said.
The quarterly survey gauged the expectations of manufacturers for January-March period for major sectors such as textiles, capital goods, metals, chemicals, tyres, cement, electronics, automotive, leather and footwear, machine tools, food, ceramics and textiles machinery.
"Responses have been drawn from 327 manufacturing units from both large and small and medium enterprises (SME) segments," FICCI said.
According to the survey, manufacturers were looking at optimal utilisation of existing capacities rather than any fresh investments. The current average capacity utilisation as reported in the survey was around 74 per cent for manufacturing.
A majority 76 per cent of the respondents were not likely to hire new workforce during the next three months. This proportion has evidently increased when compared to the previous survey which showed that around 70 per cent respondents did not expect to hire new workforce in the coming months.
“This clearly indicates that investment will not pick up at least in the near future. Subdued investment sentiments are also reflected in the expected performance of the capital goods sector,” the survey report said.
With regard to inventories, around 30 per cent respondents said they were carrying more than their average levels of inventories and another 50 per cent maintained their average levels of inventories.
Notably, higher than average inventory levels have been reported particularly in sectors such as automotive, capital goods, metals and textile machinery; whereas, sectors like leather, cement and textiles have reported less than their average levels of inventories.
The manufacturing sector, according to the FICCI survey has suggested that they address issues such as availability of raw materials at lower prices, adequate power supply, availability of cheap finance and monetary policy intervention to hasten a revival in industrial growth.
Significantly, small and medium enterprises (SME) play an important role in the development of a country. There are around 26 million MSME units in India, of which 13 million are SMEs. SMEs contribute nearly 45 per cent share of manufactured output, accounting for 40 per cent in overall exports of the country and providing employment to about 32 million people. (KNN/SD)
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