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Manufacturing sector to witness slight decline in Q4 of 2016-17: FICCI survey

11 Apr 2017 Evaluate

Indicating a slight decline in manufacturing activity during the January-March quarter (Q4), industry body, the Federation of Indian Chambers of Commerce and Industry (FICCI) has said that increased cost of production due to rise in minimum wages and raw material costs along with hardening of commodity prices in the international market has impacted manufacturing competitiveness.

FICCI latest quarterly survey on 'Indian manufacturing sector' which assessed the expectations of manufacturers for Q-4 (January-March 2017) for twelve major sectors, noted that the proportion of respondents expecting higher growth during the January-March 2017 quarter has slightly fallen to 46 per cent as against 48 per cent (revised) for October-December 2016-17 and the percentage of respondents reporting fall in exports reduced to 18 per cent in the fourth quarter from 30 per cent in the previous quarter.

In terms of order books, almost 47 per cent respondents reported higher order books for the fourth quarter as compared to 48 per cent in October-December quarter of last year, which is almost the same. Besides, hiring outlook remains subdued in manufacturing in coming months as 77 per cent of the participants said that they are unlikely to hire additional workforce in next three months.

However, in terms of capacity utilisation, there was a decline and over 35% respondents in the January-March 2017 quarter as compared to 43% respondents in previous quarter reported to have higher capacity utilization. Accordingly, the future investment outlook was less optimistic, with 75% respondent in Q-4 (Jan-March 2017) as against 77% respondents in Q-3 (October-December 2016) reporting that they don’t have any plans for capacity additions for the next six months. Responses were drawn from 320 manufacturing units from both large and SME segments with a combined annual turnover of over Rs 3.8 lakh crore.

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