Optimism Surges in Indian Manufacturing for Q1 FY 2024-25: FICCI Survey Finds

Indian manufacturing sentiment improved significantly in Q1 FY 2024-25, with 78% of respondents expecting higher or consistent production levels. Domestic demand is strong, with order books reflecting increased optimism. Despite some challenges, the investment outlook remains positive with increased exports and stable workforce availability highlighted.

Manufacturing sentiments in India have shown marked improvement in the first quarter of the financial year 2024-25, according to FICCI's Quarterly Survey on Manufacturing. The survey reveals that, compared to the previous year, where 57% of respondents reported increased production levels, around 78% of respondents in Q1 FY 2024-25 expect either higher or unchanged production levels.

The survey also highlights a surge in domestic demand for Q1 2024-25, reflected in order books. Approximately 67% of respondents anticipate a higher number of orders compared to the previous quarter. The survey covered eight key sectors, including Automotive & Auto Components, Capital Goods & Machine Tools, Cement, Chemicals, and more. Data was collected from manufacturing units of both large enterprises and SMEs, with a combined annual turnover exceeding Rs. 3 lakh crore.

FICCI reported that the current average capacity utilization in manufacturing stands at close to 75%, indicating sustained economic activity. The investment outlook remains favorable, with 41% of respondents planning investments and expansions within the next six months. However, challenges such as high interest rates, delays in payments, labor shortages, and market competition persist. Logistical hurdles are also hindering expansion.

The survey noted that 86% of respondents had either increased or maintained inventory levels in Q4 2023-24, with about 83% expecting unchanged or higher levels in Q1 2024-25. Regarding exports, 56% of respondents reported increased exports in Q4 FY 2024, and around 70% expect higher exports in Q1 2024-25. The hiring outlook is positive, with nearly 50% of respondents planning to hire additional workforce in the next three months. The average interest rate for manufacturers is reported to be 9.8%. Over 80% of respondents reported sufficient fund availability from banks.

Production costs remain elevated, with nearly 60% of respondents indicating increased production costs as a percentage of sales in Q4 FY 2024. Contributing factors include higher prices for raw materials, rising wages, utility costs, and logistics expenses. Despite this, the majority of sectors do not face labor shortages, with 83% of respondents reporting no workforce issues. However, 17% cited a lack of skilled labor, indicating a need for enhanced government and industry efforts. (ANI)

(With inputs from agencies.)