Manufacturing sector growth to continue despite slowdown in developed nations: FICCI

New Delhi, Nov 13 (Mayank Nigam) Capacity utilisation in the country’s manufacturing sector has improved to 74% and the industry plans to make fresh investments towards capacity expansion suggesting strong growth momentum despite slowdown in many developed economies, according to a Ficci survey released on Monday. The survey involving companies across various sectors such as auto, textiles, cement and pharma said that growth momentum accelerated in July-September quarter (Q2) and is likely to continue in subsequent quarters of the current fiscal 2023-24. As per the survey, over 79% of the respondents shared a higher level of production in Q2 of 2023-24.

“This assessment is also reflective in order books as 80% of the respondents in Q-2 July-September 2023-24 have had higher number of orders and demand conditions continue to be optimistic in Q-2 July-September 2023-24 as well,” a media release said. The survey stated that the existing average capacity utilization in manufacturing is around 74%, which reflects a sustained economic activity in the sector. “This is slightly higher than 73% capacity utilization reported for previous quarters. The future investment outlook has also improved as compared to the previous quarter as over 57% of respondents reported plans for investments and expansions in the coming six months.

This is also a slight improvement over the previous survey,” it said. The latest quarterly survey assessed the performance and sentiments of manufacturers for Q-2 July-September (2023-24) for 10 major sectors namely Automotive & Auto Components, Capital Goods & Construction Equipment, Cement, Chemicals Fertilisers and Pharmaceuticals, Electronics & White Goods, Machine Tools, Metal & Metal Products, Textiles, Apparels & Technical Textiles, Paper, and Miscellaneous. “Responses have been drawn from over 380 manufacturing units from both the large and SME segments with a combined annual turnover of over Rs 4.88 lakh crores,” FICCI said. The survey also noted some of the major constraints faced by the industry. Over 40% respondents highlighted inadequate demand as a significant constraint. “Whether it is domestic demand or exports, this remains a major limiting factor. Some other constraints, though not major ones, are high raw material prices, increased cost of finance, logistics, and other supply chain disruptions are some of the major constraints which are affecting expansion plans of the respondents,” the survey noted.