FICCI’s latest Quarterly Survey on Manufacturing (QSM) has revealed sustained growth for India’s manufacturing sector in the last two quarters of FY 2024. The survey, now in its 61st edition, indicates a positive outlook with a significant majority of respondents expecting higher production levels and increased order books.
In the current quarter, Q4 FY 2024, approximately 87% of respondents anticipate either higher or the same level of production, compared to 73% in the previous quarter, Q3 FY 24. Moreover, 85% of respondents expect a higher number of orders in Q4, reflecting optimism in domestic demand conditions.
The survey covered sentiments across ten major sectors, drawing responses from over 400 manufacturing units with a combined annual turnover exceeding Rs. 3.4 lakh crores. It highlighted several key trends:
Capacity Addition & Utilization:
- Average capacity utilization stands at around 73%, indicating sustained economic activity in the sector.
- Over 50% of respondents plan investments and expansions in the next six months.
- Challenges include raw material availability and price volatility, global demand uncertainty, skilled labor shortage, market volatility, and high power costs.
Inventories:
- Around 88% of respondents reported either higher or the same level of inventory in Q3 FY 24, compared to the previous year’s quarter.
- Approximately 84% expect higher or the same level of inventory in Q4 FY 24.
Exports:
- 31% of respondents reported higher exports in Q3 2023-24, with over 40% expecting higher exports in Q4 2023-24 compared to the same period last year.
Hiring:
- Nearly 40% of respondents plan to hire additional workforce in the next three months.
Interest Rate:
- The average interest rate paid by manufacturers is 9.3%.
- Close to 45% of respondents reported a slight increase in lending rates due to recent repo rate hikes.
Sectoral Growth Expectations:
- Expectations vary across sectors, with electronics & electricals and machine tools showing strong growth prospects.
Production Cost:
- Production costs have increased, attributed to rising raw material prices, labor costs, freight charges, and borrowing costs.
Workforce Availability:
- 62% of respondents reported no issues with workforce availability, while 38% cited a lack of skilled workforce.
Overall, the survey underscores the resilience of India’s manufacturing sector amid challenges, with a positive outlook for growth and investment in the coming months.
