representative image showing workers in a factory
Credit: iStock Photo
Bengaluru: A sustained and continued period of growth for India’s manufacturing sector is expected in the last two quarters of FY 2024 (October 2023-March 2024), according to a survey conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI).
Around 85 per cent out of the 400 manufacturing units from both large and small and medium enterprises (SME) segments surveyed for the report expect a higher number of orders in Q4 of FY 2024 compared to the previous quarter, FICCI said on Monday.
At the same time, 87 per cent of respondents expect either higher or the same level of production in the last quarter of this fiscal compared to 73 per cent in Q3, which is in line with the expected performance of order books.
To maintain this growth trajectory, over 50 per cent of respondents indicated plans for investments and expansions in the next six months, while close to 40 per cent are looking at hiring additional workforce in the next three months
However, several challenges continue to hinder these expansion plans, including the availability of raw materials and their escalating prices, uncertainty in global demand, shortage of skilled labour, market volatility, increased power costs, unutilized capacities, and high bank interest rates.
At present, the average capacity utilisation of the sectors covered in the report is 73 per cent, similar to how it has been in the previous quarters. At the same time, the cost of production as a percentage of sales for manufacturers in the survey rose for 67 per cent respondents in Q3, which is slightly above the previous quarters, while 38 per cent continue to feel a skilled labour shortage.
Electronics and electricals, along with machine tools, are two manufacturing sectors that are expected to have a strong (10-20 per cent) growth in Q4. The other sectors included in the survey, namely automotive and auto components, capital goods and construction equipment, chemicals, fertilisers and pharmaceuticals, FMCG, metal and metal products, paper and paper products, textiles, apparels and technical textiles, and miscellaneous, are expected to see moderate growth, which is pegged at 5-10 per cent.