Manufacturing sentiments remain positive in first quarter of 2023-24: FICCI Survey

Global headwinds notwithstanding, FICCI’s latest quarterly survey on Manufacturing reveals that sentiments remain positive for Indian manufacturing during the first quarter of 2023-24. The survey observed that after experiencing a revival of the Indian economy in the FY 2021-22, the growth momentum has continued for the subsequent quarters as well.

In the Q4 Jan-March FY 2022-23, 55% of the respondents reported higher production levels. Further, over 57% of the respondents expect a higher level of production in Q1 Apr-Jun 2023-24 with an average increase in production in single digits. This assessment is also reflected in order books as 58% of the respondents in Q-1 Apr-Jun 2023-24 have had a higher number of orders and demand conditions especially domestic, continue to be optimistic in Q-2 July-Sept 2023-24 as well, noted FICCI survey.

 FICCI’s latest quarterly survey assessed the sentiments of manufacturers for Q-1 April-June (2023-24) for nine major sectors namely Automotive and Auto Components, Capital Goods and Construction Equipment, Cement, Chemicals Fertilizers and Pharmaceuticals, Electronics and White Goods, Machine Tools, Metal and Metal Products, Textiles, Apparels and Technical Textiles, Toys and Handicrafts and Miscellaneous. Responses have been drawn from over 400 manufacturing units from both large and SME segments with a combined annual turnover of over Rs 7.70 lakh crore. 

The existing average capacity utilization in manufacturing is around 75%, which reflects sustained economic activity in the sector and is the same as in the previous quarter. The future investment outlook has also improved as compared to the previous quarter as over 56% of respondents reported plans for investments and expansions in the coming six months. This is an improvement over the previous survey where 47% reported plans for investments in the next six months.

Global economic slowdown caused by the recessionary climate in the America, EU and other developed nations and Russia-Ukraine war continue to add to volatilities in supply chain and demand.

High raw material prices, increased cost of finance, cumbersome regulations and clearances, high logistics cost due to high fuel prices, low global demand, high volume of cheap imports into India, shortage of skilled labour, highly volatile prices of certain metals, etc. and other supply chain disruptions are some of the major constraints which are affecting expansion plans of the respondents.