India's accelerated manufacturing growth momentum may continue: FICCI

In Q1 FY24, 57 per cent of the respondents reported higher production levels. Further, over 79 per cent of them shared higher level of production in Q2.

This assessment also reflected in order books as 80 per cent of the respondents in Q2 have had higher number of orders and demand conditions continue to be optimistic in Q2 as well.

Manufacturing growth expectation is moderate for textiles, apparels and technical textiles.

The existing average capacity utilisation in manufacturing is around 74 per cent, which reflects a sustained economic activity in the sector. This is slightly higher than 73 per cent capacity utilisation reported for previous quarters.

The future investment outlook has also improved as compared to the previous quarter as over 57 per cent of respondents reported plans for investments and expansions in the coming six months. This is also a slight improvement over the previous survey.

Demand is the major constraint to realise the true potential of the manufacturing sector, with over 40 per cent respondents highlighting inadequate demand as a significant bottleneck.

Whether it is domestic demand or exports, this remains a major limiting factor. Some other constraints are high raw material prices, increased cost of finance, logistics and supply chain disruptions, and these affecting expansion plans of the respondents.

Eighty-five per cent of the respondents had either more or the same level of inventory in Q2 FY24—almost equivalent to that of the previous quarter.

On the export front, performance seems to be better than previous quarters as over 48 per cent of the respondents reported higher exports in Q2 compared to 33 per cent in Q1 FY24. However, further improvement in export demand is required in the light of country’s growth aspiration.

The hiring outlook looks stable with around 38 per cent of the respondents looking at hiring additional workforce in the next three months.

The FICCI survey elicited responses from over 380 manufacturing units from large, small and medium segments with a combined annual turnover of over ₹4.88 lakh crore.

Fibre2Fashion News Desk (DS)