New Delhi, Nov 13 (KNN) Despite a slowdown in developed nations, India's manufacturing sector is expected to register a strong growth momentum during the second quarter of the fiscal year 2023-24, FICCI said.

The latest quarterly survey from the Federation of Indian Chambers of Commerce and Industry revealed that in Q1 (April-June), 57 per cent of respondents reported increased production levels, which gained further traction in Q2 (July-September) with over 79 per cent noting higher production. Order books also reflect this positive trend, with 80 per cent of respondents reporting increased orders, indicating optimistic demand conditions.

The survey covered ten major sectors, drawing responses from over 380 manufacturing units with a combined annual turnover exceeding Rs 4.88 lakh crore.

FICCI survey revealed that an average capacity utilisation stands at 74 per cent, slightly higher than in previous quarters, reflecting sustained economic activity. 

The investment outlook has improved, with 57 per cent of respondents planning investments and expansions in the next six months, a slight increase from the previous survey.

The also identifies demand as a major constraint, with over 40 per cent of respondents highlighting inadequate demand as a significant hurdle. High raw material prices, increased finance costs, and supply-chain disruptions are also noted. 

In Q2, 85 per cent of respondents reported either higher or the same levels of inventory compared to the previous quarter.Export performance also improved, with 48 per cent reporting higher exports in the second quarter compared to 33 per cent in the first quarter. 

The hiring outlook remains stable, with 38 per cent planning to hire additional workforce in the next three months. Additionally, 59 per cent of respondents reported a marginal increase in interest rates over the previous quarter.

Sectoral Growth and Production Cost

According to the survey, outperforming sectors include electronics and white goods, cement, automotive, and machine tools. In contrast, others like capital goods and construction machinery, chemicals, textiles, metals, and paper showed moderate growth.

"The cost of production as a percentage of sales for manufacturers in the survey has risen for 58 per cent of the respondents compared to 77 per cent of respondents for the previous quarter. Nonetheless, high raw material prices and high energy costs are the two main factors contributing to the high production costs," FICCI said.

With regards to the workforce availability, the 82 per cent reported no issues with workforce availability, but 18 per cent expressed concerns about the lack of skilled workforce in their sectors.

(KNN Bureau)