Despite global challenges, manufacturing confidence in India remained optimistic during the June quarter of FY24, according to a Ficci poll issued on Monday.
According to the industry body’s most recent quarterly poll on manufacturing outlook, economic momentum has sustained in the quarters after the Indian economy recovered in FY22.
For the period of April to June (2023–24), the survey examined the opinions of manufacturers in nine key industries: automotive and auto parts, 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.
More than 400 manufacturing facilities from the big and SME groups, with a total annual revenue of more than Rs 7.70 lakh crore, have responded.
55% of the respondents indicated greater production levels during the March quarter of FY23.
Additionally, more than 57% of respondents anticipate stronger output in Q1 FY24, with an average increase in production of about ten percent.
This evaluation is reflected in order books as well, the study found, as 58% of respondents in Q1 FY24 reported receiving more orders, and demand conditions, particularly domestic, remained upbeat in Q2.
Manufacturing now has an average capacity utilization of around 75%, which demonstrates continued economic activity in the industry and is the same as it was in the previous quarter.
As more than 56% of respondents revealed intentions for investments and expansions in the next six months, the prognosis for future investment has also improved compared to the previous quarter. In the last poll, 47% of respondents said that they would make investments in the next six months.
The recessionary environment in the United States, the EU, and other developed countries, as well as the conflict in Russia and Ukraine, continue to contribute to supply chain and demand volatility.
According to the survey, some of the major obstacles preventing respondents from expanding their businesses include high raw material costs, rising financing costs, onerous regulations and clearances, high logistics costs because of high fuel prices, low global demand, a high volume of inexpensive imports into India, a shortage of skilled labor, highly volatile metal prices, etc. prices, and other supply chain disruptions.
The forecast for recruiting seems promising, as more than 38% of respondents plan to increase their employment over the next three months.
A little over 9% per year on average was the average interest rate paid by manufacturers during the most recent quarter, while the maximum rate at which a loan was increased was 16% per year.
According to predictions, the electronics and white goods industry is set to see rapid expansion.
Forecasts for substantial growth include the car and auto component, capital goods, and construction equipment industries.
The sectors for machine tools and cement are expected to develop reasonably well. Rest of the industries are anticipated to develop at a moderate to low pace in Q1FY24.
