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The growth momentum witnessed in the manufacturing sector so far this fiscal will likely sustain for the next six to nine months, according to a survey by industry body Ficci.However, global economic uncertainty in the wake of the Russia-Ukraine war and increasing cases of various mutations of the Covid virus globally have exacerbated volatilities, impacting major economies, it pointed out.As many as 61% of respondents in the survey reported higher production levels in the second quarter of FY23 from a year before.
The average capacity utilisation in manufacturing stood at a decent 70%, which reflects “a sustained economic activity”, Ficci said.The investment outlook has also slightly improved, as close to 40% of respondents reported plans for capacity additions in the next six months, by as much as over 15% on an average, it added.The survey is based on the responses drawn from over 300 manufacturing units, both large and small, with a combined annual turnover of over `2.8 trillion. It covered ten major sectors, such as automotive & auto components, capital goods, cement, chemicals fertilisers and pharmaceuticals, electronics, machine tools, metal & metal products, paper products, textiles, textile machinery and miscellaneous.
The survey suggested that capacity utilisation remained in the range of 64% to 90% across the ten sectors. Paper products led in capacity utilisation (95%), followed by auto and auto components (90%), textile machinery (90%), cement (75%), capital goods (73%), chemicals, fertiliser and pharma (70%), textiles (69%), machine tool (68%), electronics (65%) and metals and metal products (64%).The survey also highlighted that global economic uncertainty in the wake of the Russia-Ukraine war and increasing cases of various mutations of the Covid virus globally have exacerbated volatilities, impacting major economies.
High raw material prices, increased cost of finance, cumbersome regulations and clearances, shortage of working capital, high logistics cost due to rising fuel prices and blocked shipping lanes, low domestic and global demand, excess capacities due to high volume of cheap imports into India, unstable market, and other supply chain disruptions are some major constraints affecting expansion plans of the respondents, it said.
Ficci’s survey results corroborate the findings of the PMI manufacturing survey, which showed decent expansion of the sector in both September and October. The seasonally-adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) was up from 55.1 in September to 55.3 in October. A print above 50 means expansion while that below 50 suggests contraction.
The October PMI data pointed to an improvement in overall operating conditions for the 16th month in a row.
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