improvement in export demand is needed for India’s growth aspiration
FICCI’s latest quarterly survey on Manufacturing reveals that momentum of growth has accelerated in second Quarter of 2023-24 which is likely to continue for the subsequent quarters of FY 2023-24 as well, notwithstanding slowdown in developed nations. In the Q1 April-June 2023-24, 57% of the respondents reported higher production levels.
On the export front, performance seems to be better than previous quarters as over 48% of the respondents reported higher exports in Q-2 July-September 2023-24 as compared to the 33% in Q-1 2023-24, FICCI said on 12 Nov 2023. However, further improvement in export demand is required in the light of country’s growth aspiration.
Further, over 79% of the respondents shared higher level of production in Q2 July-September 2023-24. This assessment is also reflective in order books as 80% of the respondents in Q-2 July-September 2023-24 have had higher number of orders and demand conditions continue to be optimistic in Q-2 Jul-Sept 2023-24 as well.
FICCI’s latest quarterly survey assessed the performance and sentiments of manufacturers for Q-2 July-September (2023-24) for ten 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, Paper, and Miscellaneous. Responses have been drawn from over 380 manufacturing units from both the large and SME segments with a combined annual turnover of over Rs.4.88 lakh crores.
The existing average capacity utilization in manufacturing is around 74%, which reflects a sustained economic activity in the sector. This is slightly higher than 73% capacity utilization reported for previous quarters.
The future investment outlook has also improved as compared to the previous quarter as over 57% of respondents reported plans for investments and expansions in the coming six months. This is also a slight improvement over the previous survey.
In terms of major constraints, demand comes out to be the major constraint and limiting factor to realise the true potential of manufacturing sector in India, with over 40% respondents highlighting inadequate demand as a significant constraint.
Whether it is domestic demand or exports, this remains a major limiting factor. Some other constraints, though not major ones, are high raw material prices, increased cost of finance, logistics, and other supply chain disruptions are some of the major constraints which are affecting expansion plans of the respondents to the survey, FICCI said. Fiinews.com
