Domestic demand conditions continue to be optimistic in Jul-Sept quarter
New Delhi, NFAPost: FICCI’s latest quarterly survey on Manufacturing reveals that sentiments remain positive for Indian manufacturing during the first quarter of 2023-24.
Over 57 per cent of the respondents expect a higher level of production in the Apr-Jun quarter of 2023-24 on the back of a higher number of orders and continuing optimism in the domestic demand conditions in the second quarter of 2023-24 as well, the survey added.
In the fourth quarter of FY23, 55 per cent of the respondents reported higher production levels.
Responses have been drawn from over 400 manufacturing units from both large and SME (Small and Medium Enterprises) segments with a combined annual turnover of over Rs 7.70 trillion.
FICCI’s survey assessed the sentiments of manufacturers for Q1 of 2023-24 in nine major sectors namely automotive and auto components, capital goods and construction equipment, cement, chemicals, fertilisers and pharmaceuticals, electronics and white goods, machine tools, metal and metal products, textiles, apparels and technical textiles, toys and handicrafts and miscellaneous.
According to the survey, the outlook for exports seems to be waning as about 30 per cent of the respondents reported higher exports in the March quarter of FY23 as compared to about 28 per cent of the respondents expecting their exports to be higher in the first quarter of FY24.
India’s merchandise exports in June contracted the most in more than three years as external demand ebbed because of an economic slowdown and high inflation in developed countries.
Exports fell 22 per cent year-on-year (YoY) to $32.97 billion last month – their sharpest decline since May 2020, when contraction was 35 per cent, data released by the department of commerce showed on Friday.
The survey noted that the existing average capacity utilisation in manufacturing is around 75 per cent which reflects a sustained economic activity in the sector and is same as in the previous quarter.
“The future investment outlook has also improved as compared to previous quarter as over 56 per cent respondents reported plans for investments and expansions in the coming six months,” it added.
In the Q4FY23 survey, 47 per cent respondents reported plans for investments in next six months.
According to the survey, there seems to be an upward trend in the costs pressures on manufacturers in first quarter of FY24. “High raw material prices especially that of steel, increased transportation, logistics and freight cost, and rise in the prices of crude oil and fuel have been the main contributors to increasing cost of production,” it said.
The survey expects strong growth in electronics and white goods sector, auto and auto components, and Capital Goods and construction machinery.
