Indian manufacturing has witnessed a significant acceleration in the second quarter of the financial year 2023-24, and this upward trend is expected to continue in the subsequent quarters, according to a recent survey conducted by industry body FICCI. Despite the slowdown observed in developed nations, the manufacturing sector in India has managed to maintain its growth momentum. The survey revealed that around 57 percent of the manufacturing companies that participated reported higher production levels, a figure that rose to 79 percent in the September quarter.
The survey analyzed the performance of ten major sectors, including automotive and auto components, capital goods and construction equipment, cement, chemicals, fertilizers and pharmaceuticals, electronics and white goods, machine tools, metal and metal products, textiles, apparel and technical textiles, paper, and miscellaneous. Data was collected from over 380 manufacturing units, encompassing both large and small and medium-sized enterprises, and totaling an annual turnover of over Rs. 4.88 lakh crore.
Strong growth was observed in sectors such as electronics and white goods, cement, automotive, and machine tools, while others experienced more moderate growth. The survey also highlighted that 80 percent of respondents recorded a higher number of orders and reported optimistic demand conditions. The current average capacity utilization in the manufacturing sector stands at approximately 74 percent, slightly higher than the previous quarters. Notably, the paper and paper products sector reported a capacity utilization rate of 90 percent, while cement reported 80 percent.
Furthermore, 85 percent of the respondents reported either an increase or the same level of inventory levels. However, the production cost rose for 58 percent of the participants as compared to the previous quarter. Nevertheless, there has been an improvement in the future investment outlook, with more than 57 percent of the surveyed companies indicating plans for investments and expansions in the next six months, surpassing the previous survey’s figures. It is worth mentioning that only 38 percent of the respondents have intentions to hire an additional workforce in the next three months.
