The growth momentum which has been witnessed by India's manufacturing sector for the past few months is likely to stay for the next six to nine months, according to the latest quarterly survey by Ficci.
According to the survey, the existing average capacity utilisation in manufacturing is over 70 per cent, which reflects a sustained economic activity in the sector. The future investment outlook also slightly improved as compared to previous quarter as close to 40 per cent respondents reported plans for capacity additions in the next six months by over 15 per cent on an average.
However, global economic uncertainty caused by the Russia-Ukraine war and increasing cases of various mutations of Covid virus worldwide have accentuated the 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.
Ficci's latest quarterly survey on manufacturing reveals that after experiencing revival of Indian economy in FY22, momentum of growth continued in subsequent quarters, first and second quarters of FY23, with over 61 per cent respondents reported higher production levels in Q2 (July-Sept 2022-23), the industry chamber stated.
This is significantly more than the percentage of respondents experiencing higher growth in the second quarter of last few years, including pre-Covid years, it added.
The survey assessed the sentiments of manufacturers for Q2 (2022-23) for 10 major sectors namely automotive & auto components, capital goods, cement, chemicals fertilisers and pharmaceuticals, electronics, machine tools, metal & metal products, paper products, textiles, textile machinery and miscellaneous.
Responses were drawn from over 300 manufacturing units from both large and SME segments with a combined annual turnover of over Rs 2.8 lakh crore.
Manufacturing activities in India remained robust and price pressures were contained in October as new orders and production rose at a slower but stronger pace, according to a monthly survey released on November 1.
The seasonally-adjusted S&P Global India Manufacturing Purchasing Managers' Index (PMI) was up from 55.1 in September to 55.3 in October.
The October PMI data pointed to an improvement in overall operating conditions for the 16th straight month. In PMI parlance, a print above 50 means expansion while a score below 50 indicates contraction.