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Demand conditions likely to soften for manufacturing sector in Q1:2026-27: RBI survey

09 Apr 2026 Evaluate

The Reserve Bank of India (RBI) in its latest industrial outlook survey of the manufacturing sector has said that manufacturing firms expect demand conditions to soften in Q1:2026-27 as reflected in their lower optimism regarding production, order books and capacity utilisation. Besides, in the quarter, cost pressures are also anticipated to remain elevated, with a partial pass-through onto consumers, while profit margins are likely to remain under strain.

The survey report further noted that manufacturers’ optimism on demand conditions moderated in Q4:2025-26 compared to the previous quarter, with weaker sentiments on production and exports amid the West Asia conflict. Besides, in Q4:2025-26, manufacturing firms reported increased cost pressures and some rise in selling prices with pressure on profit margins. Overall, the Business assessment index remained stable in Q4:2025-26.

Going forward, manufacturing firms expect demand conditions to improve during Q2 and Q3:2026-27, while input cost pressures are likely to persist, but the firms are optimistic about selling prices. Meanwhile, a total of 1,256 companies responded in this round of the survey conducted during January-March 2026.


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