The survey assessed the sentiments of manufacturers for April-June (2023-24) for nine major sectors namely automotive & auto components, capital goods & construction equipment, cement, chemicals fertilizers and pharmaceuticals, electronics & white goods, machine tools, metal & metal products, textiles, apparels & technical textiles, toys & handicraft.
Responses have been drawn from over 400 manufacturing units from both large and SME segments with a combined annual turnover of over Rs 7.70 lakh crore.
In March quarter FY23, 55 per cent of the respondents reported higher production levels.
Further, over 57 per cent of the respondents expect a higher level of production in Q1 FY24 with an average increase in production in single digit.
This assessment is also reflective in order books as 58 per cent of the respondents in Q1 FY24 have had higher number of orders and demand conditions especially domestic, continue to be optimistic in Q2 as well, the survey said. The existing average capacity utilization in manufacturing is around 75 per cent, which reflects sustained economic activity in the sector and is same as in the previous quarter. The future investment outlook has also improved as compared to the previous quarter as over 56 per cent of respondents reported plans for investments and expansions in the coming six months. This is an improvement over the previous survey where 47 per cent reported plans for investments in next six months.
However, global economic slowdown caused by the recessionary climate in America, the EU and other developed nations and Russia-Ukraine war continue to add to volatilities in supply chain and demand.
High raw material prices, increased cost of finance, cumbersome regulations and clearances, high logistics cost due to high fuel prices, low global demand, high volume of cheap imports into India, shortage of skilled labour, 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, the survey said.
The hiring outlook looks positive as over 38 per cent of the respondents are looking at hiring additional workforce in the next three months.
The average interest rate paid by manufacturers has more and less remained same at little over 9 per cent per annum during last quarter and the highest rate at which loan has been raised is 16 per cent per annum.
Based on expectations, electronics & white goods sector is likely to enjoy strong growth.
Sectors like auto & auto components and capital goods & construction machinery are expected to have strong growth forecasts.
Cement and machine tools sectors are also to experience moderately strong growth. Rest all the sectors are expected to register moderate to moderately low growth in Q1FY24.