Subhrakant Panda, President, FICCI On CNBC-TV18 said that the momentum in manufacturing continues to rise as there has been a 56 percent increase in production in Q3. "And over 50 percent of respondents expecting further higher numbers in Q4. Capacity utilisation has actually inched up to 75 percent because in the previous survey was at 70 percent," he said.
India's manufacturing sector continues to see growth with some temporary impact of global slowdown, according to FICCI's manufacturing survey that assessed 11 major sectors with over 400 manufacturing units’ responses. The survey also highlights that the existing average capacity utilisation remains at 75 percent reflecting a sustained economic activity.
As per the survey, there are signs that cost pressure is softening for manufacturing units. 73 percent of the respondents say they are facing a rise in the production costs compared to more than 90 percent who faced cost pressure in the previous surveys. 58 percent say they reported higher production levels in Q3. So cost pressure is easing and production levels are on the rise.
Subhrakant Panda, President, FICCI On CNBC-TV18 said that the momentum in manufacturing continues to rise as there has been a 56 percent increase in production in Q3. "And over 50 percent of respondents are expecting further higher numbers in Q4. Capacity utilisation has actually inched up to 75 percent because in the previous survey was at 70 percent," he said.
"We are getting to that level where, you know, companies will start pulling the trigger on, on their investment plans. And I believe that is happening," Panda added.
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He further said that the survey points out is that 47 percent of the respondents talked about investment plans in the next six months, which is higher than the previous quarter.
"And according to some of the data that I have seen from CMIE, private sector project announcement as on December 2022 stood at Rs 6.25 trillion which is up 80 percent from the previous quarter and 100 and 30 percent for a year on year," Panda said.
He went on to say that despite inflation in western economies, the impact of state investment summits has been seen, and more announcements are being made for investments. However, the Russia-Ukraine conflict has created uncertainty, and the exclusion of RoDTEP needs to be relooked by the government for various sectors.
"As far as India is concerned, there is continuing confidence in the economy which is reflecting in terms of greater announcements for investments. But it is also a time where I think we have to remain alert to to how things around us play out."
The survey revealed that auto components and machinery have over 80 percent capacity utilisation, and the reopening in China is a positive sign. Although hiring is positive, it remains below potential, and there were 24 percent respondents who expressed concern over trained manpower. The decision to invest is a result of domestic demand and markets. he said.
"Some of the sectors which have reported more than 80 percent capacity utilisation, these are auto and auto components, capital, goods, paper, petrochemicals, textile machinery, etcetera, these are all above 80 percent. And if you look at some of the laggards, these are chemicals and pharmaceuticals, machine tools and metal products, surprisingly. But we also need to look at certain other measures which can provide a boost to sectors like steel, metals and chemicals and pharmaceuticals," Panda said.
The FICCI President also cautioned that the global battle with inflation and rising interest rates cannot be ignored, as it may lead to rising borrowing costs. The pressure is already showing in exports, and concerns remain for advanced economies.
(Edited by : Anushka Sharma)
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