As per the industry body Ficci survey, Indian manufacturing sector is likely to witness subdued growth in the October-December quarter of current fiscal particularly due to the concerns over high interest rates. The Ficci’s report, based on the survey of thirteen manufacturing industries, has found that prevailing high cost of credit is impacting the margins of the manufacturing industries and the sector like automotive, capital goods and electronics are expected to witness sluggish growth in Q3 FY14. Presently, interest rate paid by the manufacturers ranges from 8 to 16 percent with average interest rate at around 12 percent per annum.
Meanwhile, the survey revealed that five out of thirteen sectors are likely to witness low growth (less than 5 percent). Two sectors such as leather and paper, are expected to have a strong growth of over 10 percent in Q3 2013-14 while remaining sectors are likely to witness moderate growth. Further, the investment into manufacturing sector is also likely to remain subdued in reported quarter as 72 percent respondents not having any plans for capacity additions for the next six months as compared to 74 percent respondents in the previous survey. Further, outlook on hiring people also looks miserable in manufacturing sector with over 75 percent of the respondents unlikely to hire additional workforce in next three months.
Meanwhile, the survey noted that demand conditions appear to be slightly better in Q3 2013-14 as 44 percent respondents reporting higher order books for the quarter under review as compared to 32 percent respondents in the previous quarter.
