Manufacturers have witnessed strong sightings of domestic demand, with 83% expecting an increase in order volume compared to the previous quarter.According to a survey by the Federation of Indian Chamber of Commerce and Industry (FICCI), growth momentum in the Indian manufacturing sector continues.
This study assesses manufacturing performance for 2024 FY25 (October-December 2024) and shows sustained production levels, stable investment plans and promising export growth.
This is a significant improvement from 73% in the third quarter, and is the continuing momentum of signaling in industrial activity.
Investment outlook remains positive, with 42% of respondents planning to expand their manufacturing capacity in the next six months, a figure consistent with the ratings from the previous quarter.
Manufacturers have witnessed strong sightings of domestic demand, with 83% expecting an increase in order volume compared to the previous quarter. However, there are still some concerns about the potential slowdown in demand in the near future.
The survey covers eight major manufacturing sectors including automobiles, capital goods, electronics, chemicals, metals and textiles, representing annual sales of Rs4.7 lakh krole. Overall capacity utilization of the sector remains stable at 75%, indicating stable economic activity.
Exports are emerging as a strong driver of growth, with over 70% of respondents expecting an increase in export volume in the third quarter, compared to 65% in the second quarter.
Employment outlook is also positive, with 35% of manufacturers planning to increase their workforce in the next three months, reflecting optimism in the sector’s growth potential.
However, rising production costs remain a major concern, with 60% of respondents reporting higher costs as a percentage of sales.
Key cost drivers include increased prices for raw materials such as iron, steel, rubber, chemicals such as ethylene oxide and caustic soda, and higher labor and freight charges. The depreciation of the rupee further escalates import costs and increases the financial burden on manufacturers.
Other challenges identified in the study include high interest rates, regulatory hurdles and limited access to advanced machines.
The average interest rate paid by manufacturers is 9.5%, with over 80% of respondents verifying adequate access to bank funds for working capital and long-term investments.
With regard to the availability of the labor force, most manufacturers (80%) report no labor shortages. However, 20% expressed concern about the shortage of skilled workers and emphasized the need to strengthen skills development initiatives through collaboration between government industry.
