Growth momentum of India's manufacturing sector continues says FICCI Survey

The survey, which assessed manufacturing performance for Q3 FY 2024-25 (October-December 2024), indicates sustained production levels, stable investment plans, and promising export growth.

This is a significant improvement from 73 per cent in Q3 FY24, signalling continued momentum in industrial activity.

The investment outlook also remains positive, with 42 per cent of respondents planning to expand their manufacturing capacities in the next six months, a figure consistent with the previous quarter's assessment.

Manufacturers are witnessing strong domestic demand, with 83 per cent expecting an increase in order volumes compared to the previous quarter. However, some concerns remain about a potential slowdown in demand in the near future.

The survey covered eight major manufacturing sectors, including automotive, capital goods, electronics, chemicals, metals, and textiles, representing a combined annual turnover of Rs4.7 lakh crore. The overall capacity utilization in the sector remains steady at 75 per cent, indicating stable economic activity.

Exports have emerged as a strong driver of growth, with over 70 per cent of respondents expecting higher export volumes in Q3 FY25, compared to 65 per cent in Q2 FY25.

The hiring outlook is also positive, with 35 per cent of manufacturers planning to increase their workforce in the next three months, reflecting optimism in the sector's growth potential.

However, rising production costs remain a major concern, with 60 per cent of respondents reporting higher costs as a percentage of sales.

Key cost drivers include increasing prices of raw materials such as iron, steel, rubber, and chemicals like ethylene oxide and caustic soda, as well as higher labour wages and freight charges. The depreciation of the rupee has further escalated import costs, adding to the financial burden on manufacturers.

Other challenges identified in the survey include high interest rates, regulatory hurdles, and limited access to advanced machinery.

The average interest rate paid by manufacturers stands at 9.5 per cent, with over 80 per cent of respondents confirming sufficient access to bank funds for working capital and long-term investments.

In terms of workforce availability, the majority of manufacturers (80 per cent) reported no labour shortages. However, 20 per cent expressed concerns over a lack of skilled workers, emphasizing the need for enhanced skill development initiatives through government-industry collaboration. (ANI)