FICCI’s survey hints at a slower manufacturing growth in first quarter

After a weak industrial growth numbers, industry body, the Federation of Indian Chambers of Commerce and Industry (FICCI) in its latest survey has hinted at a slower growth in manufacturing and stated that growth of India's manufacturing sector may decelerate during June quarter due to factors like bleak export outlook, poor demand and high cost of borrowing. FICCI said that its survey had earlier indicated revival in the manufacturing activity in fourth quarter of 2015-16, which seems to be slowing down in first quarter of this fiscal now.

The industry body in its quarterly survey has further stated that the percentage of respondents expecting higher growth in the April-June quarter has gone down to 53% compared with 60% for January-March. As per the survey, the hiring outlook too seems bleak in manufacturing in coming months as over 80% respondents were not likely to hire additional workforce in the next 3 months.

The survey has also said that the outlook for export continues it’s downward trend with the proportion of respondents expecting higher exports in the quarter falling to 36 per cent, much lower than 41 per cent in the fourth quarter of 2015-16. The survey also noted that only 38 per cent respondents reported higher order books for the April-June quarter which is less compared to the 44 per cent of previous quarter. In terms of investment, for Q1 2016-17, 75 per cent respondents as against 68 in the previous quarter reported that they don't have any plans for capacity additions for the next six months implying a slack in private sector investments in manufacturing to continue.

The survey responses which have been drawn from 308 manufacturing units from large, medium and small segments with a combined annual turnover of over Rs 4 lakh crore, gauged the expectations of manufacturers for 13 major sectors namely textiles, capital goods, metals, chemicals, cement and ceramics, electronics, auto, leather & footwear, machine tools, food, tyre, paper and textiles machinery.