FICCI quarterly survey on manufacturing reveals sustained growth in last two quarters of FY24

FICCI’s latest Quarterly Survey on Manufacturing (QSM) reveals a sustained and continued period of growth for India’s manufacturing sector in the last two quarters of FY 2024. Compared to the previous quarter, Q3 FY 24, when 73% of respondents had reported higher production levels, in the current Q4 FY 2024, around 87% of respondents expect either higher or the same level of production. 

This upbeat assessment of India’s manufacturing is also reflected in the higher-order books. 85% of the respondents in Q4 FY 2024 are expecting a higher number of orders compared to the previous quarter. Domestic demand conditions show optimism in the current Q4 2024.

FICCI’s latest QSM assessed the sentiments of manufacturers for Q4 2023-24 for ten major sectors namely Automotive and Auto Components, Capital Goods and Construction Equipment, Chemicals, Fertilizers and Pharmaceuticals, Electronics and Electricals, FMCG, Machine Tools, Metal and Metal Products, Paper and Paper Products, Textiles, Apparels and Technical Textiles, 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. 3.4 lakh crore.

The existing average capacity utilization in manufacturing is around 73%, which reflects sustained economic activity in the sector, which is more or less the same as reported in previous surveys.

The future investment outlook also looks steady, with over 50% of respondents indicating plans for investments and expansions in the next six months.

Challenges related to the availability of raw materials and their escalating prices, uncertainty in global demand, shortage of skilled labor, market volatility, increased power costs, unutilized capacities, and high bank interest rates, etc are some of the major constraints that are affecting expansion plans of the respondents.

In terms of sectoral growth expectations, correspondents expected moderate growth in the auto and auto components sector. 

The hiring outlook remains stable as close to 40% of the respondents are looking at hiring additional workforce in the next three months.

Many auto sector respondents are planning to expand their workforce shortly, the press release noted. 

On average, the industry reported availing credit at an interest rate close to 9.7% per annum. All the respondents expressed that there is sufficient availability of funds from banks. Only 33% of the respondents reported an increase in the lending rate by the banks.