The existing average capacity utilization for Q4 2021-22 in manufacturing is 77 per cent, a little higher than 75 per cent in the previous quarter, which reflects increased economic activity in the sector.
New Delhi: FICCI’s quarterly survey on Manufacturing sector has revealed that after experiencing revival of Indian manufacturing in the first three quarters of 2021-22, momentum of growth continued in subsequent quarters of Q-4 (Jan-Mar 2021-22) and Q-1 April-June (2022-23) and there seems to be an improvement in hiring/employment outlook after a long gap.
The survey noted that 54.8 per cent respondents reported higher production levels in Q-1 (April- June 2022-23), with an average expectation of increase in production by over 10 per cent. This is slightly more than the percentage of respondents experiencing higher growth in Q-1 of last year. Also, FICCI survey observed that there seems to be an improvement in employment creation by the sector as compared to the previous quarter (Q-3 of 2021-22), where only 25 per cent of the respondents were looking at hiring in next few months. This percentage has improved significantly to 53 per cent of the respondents in Q-1 2022-23 who are now looking at hiring additional workforce in the next three months. This assessment is also reflective in order books as 55 per cent of the respondents in Q-1 (April-June 2022-23) are expecting higher number of orders, survey noted.
FICCI’s latest survey assessed the sentiments of manufacturers for Q-1 April-June (2022-23) for twelve major sectors namely Automotive, Capital Goods, Cement, Chemicals, Fertilizers and Pharmaceuticals, Footwear, Machine Tools, Metal and Metal Products, Paper Products, Textiles, Toys, Tyre and Miscellaneous. Responses have been drawn from over 300 manufacturing units from both large and SME segments with a combined annual turnover of over 3 lakh crore.
The existing average capacity utilization for Q4 2021-22 in manufacturing is 77 per cent, a little higher than 75 per cent in the previous quarter, which reflects increased economic activity in the sector. The future investment outlook also improved as compared to previous quarters but remains that of cautious optimism, as 40 per cent respondents reported plans for capacity additions in the next six months, by 14 per cent on an average.
Global economic uncertainty caused by the Russia-Ukraine War and increasing cases of COVID worldwide have accentuated the volatilities impacting the major economies. High raw material prices, increased cost of finance, cumbersome regulations and clearances, shortage of working capital, high logistics cost due to rising fuel prices and blocked shipping lanes, low domestic and global demand, excess capacities due to high volume of cheap imports into India, unstable market, high power tariff, shortage of skilled labor, 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.