Manufacturing Sector Sees Continued Growth in Q3 and Q4: FICCI Survey

Feb 12, 2024 Mark

New Delhi, India, Feb 12, 2024: 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.