Cost pressures brought on by inflation appear to be easing, and growth momentum is anticipated to continue in the fourth quarter of FY23, supported by projections for increased manufacturing sector production levels.
After a recovery in growth was seen in FY22, the FICCI’s most recent quarterly survey on manufacturing indicates that economic momentum has continued for the subsequent quarters of FY23 with some temporary effects of the global downturn on Indian manufacturing.
Greater Output
58% of the respondents reported higher output levels in the December quarter. Also, approximately 50% of respondents anticipate higher production levels in the March quarter of FY23, with double-digit average increases in production. This evaluation is also reflected in order books, where 52% of the According to the poll results, respondents had a higher number of orders in the third quarter of FY23, and demand conditions are expected to remain favourable in the fourth quarter.
According to the poll, the manufacturing industry’s cost constraints appear to be easing a bit. “For manufacturers in the survey, the cost of production as a proportion of sales has increased in the third quarter for 73% respondents, which is lower than recorded in the previous quarter,” it noted.
The latest quarterly poll from FICCI evaluated the attitudes of manufacturers for the March quarter of FY 23 for 11 major sectors, including capital goods, electronics, machine tools, metal, paper, petrochemicals & fertilisers, textiles and apparel, and chemicals and pharmaceuticals. More than 400 factories, both big and small Participants in this survey included SME categories with a total annual revenue of more than 10 lakh crores.
The respondents’ current average capacity utilisation was estimated to be approximately 75%, which reflects a steadfast level of economic activity in the industry. As more than 47% of respondents revealed intentions for investments and expansions in the next six months, the prognosis for future investment has also improved compared to the previous quarter.
Worldwide Uncertainty
The poll did remark that the Russia-Ukraine war’s impact on global economic stability and the rise in Covid virus mutation instances in other nations had contributed to supply chain and demand volatility.
The respondent said that obstacles to their expansion goals included rising financial costs, onerous clearances and regulations, and high logistics costs. Low levels of demand worldwide, extensive cheap imports into India, a lack of skilled labour, and very unstable metal pricing are just a few examples.
“Compared to the prior quarter, nearly 87% of respondents had either higher or the same amount of inventory in the December quarter. In the March quarter, 90% of respondents anticipate that inventory levels will either stay the same or rise.
Despite the fact that respondents had a favourable outlook on hiring, just 32% of them said they planned to add to their workforce in the coming three months.
According to respondent expectations, industries like the automotive, capital goods, cement, electronics, petrochemicals, and fertiliser sectors are likely to experience rapid growth. Rest, all industries are anticipated to in the fourth quarter of FY 2022-23, report moderate to low growth,”
