Investments will increase 14% capacity addition in six months, says 40% survey respondents
The outlook for exports from India seems to be positive as 53.4% of the respondents expect an average increase of 15.2% in exports in Q-1 2022-23 as compared to the first quarter of last year, according to a latest quarterly survey by FICCI.
The survey, released on 19 June 2022, revealed that momentum of growth continued in the subsequent quarters of Q-4 in the Manufacturing sector which had experienced revival in the first three quarters of 2021-22.
The future investment outlook also improved as compared to previous quarters but remains that of cautious optimism, as 40% respondents reported plans for capacity additions in the next six months, expecting 14% expansion on an average.
The existing average capacity utilization for Q4 2021-22 in manufacturing is 77%, a little higher than 75% in the previous quarter, which reflects increased economic activity in the sector.
The survey noted that 54.8% respondents reported higher production levels in Q-1 (April- June 2022-23), with an average expectation of increase in production by over 10%.
This is slightly more than the percentage of respondents experiencing higher growth in Q-1 of last year.
Also, the 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% of the respondents were looking at hiring in next few months.
This percentage has improved significantly to 53% 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% of the respondents in Q-1 (April-June 2022-23) are expecting higher number of orders, the survey noted.
The quarterly 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 & 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 Rs.3 lakh crores.
Average interest rate paid by the manufacturers has increased to 9.69% p.a. as against 8.4% p.a. during last quarter and the highest rate at which loan has been raised is 16% p.a. High lending rates were reported by around 70% of the respondents.
Based on expectations in different sectors, almost all sectors are likely to register moderate to strong growth in Q-1 2022-23 except few as given in the table below.
The cost of production as a percentage of sales for manufacturers in the survey has risen for 91% respondents in Q-4 2021-22.
Reduced availability and high raw material prices especially that of steel, increased transportation, logistics and freight cost, and rise in the prices of crude oil and fuel have been the main contributors to increasing cost of production.
Other factors responsible for escalating production costs include enhanced labor costs, high cost of carrying inventory, and fluctuation in the foreign exchange rate. fiinews.com
