FICCI’s latest quarterly manufacturing survey reveals that after experiencing a recovery in Indian manufacturing in the first three quarters of 2021-22, the growth momentum has continued in subsequent quarters of Q- 4 (January-March 2021-22) and Q-1 April-June (2022-23) and there seems to be an improvement in hiring/employment prospects after a long interval.
The survey noted that 54.8% of respondents reported higher production levels in the first quarter (April-June 2022-23), with an average expectation of a production increase of more than 10%. This is slightly more than the percentage of respondents experiencing higher growth in Q-1 of last year.
Additionally, the FICCI survey observed that there appears to be an improvement in job creation by the sector compared to the previous quarter (Q-3 of 2021-22), when only 25% of respondents planned to hire in the next few years. month.
This percentage has improved significantly to 53% of respondents in Q-1 2022-23 who now plan to hire additional labor in the next three months. This assessment is also reflected in order books, as 55% of respondents in the first quarter (April-June 2022-23) expect a higher number of orders, according to the survey.
FICCI’s latest quarterly survey assessed manufacturers’ sentiments for the first quarter of April to June (2022-23) for twelve major sectors, namely automotive, capital goods, cement, chemicals , fertilizers and pharmaceuticals, shoes, machine tools, metals and metal products, paper products, textiles, toys, tires and miscellaneous. Responses were drawn from over 300 manufacturing units in the large and SME segments with a combined annual turnover of over 3 lakh crores.
Adding and using capacity
The average existing capacity utilization for the fourth quarter of 2021-2022 in the manufacturing sector is 77%, slightly higher than 75% in the previous quarter, which reflects increased economic activity in the sector. The outlook for future investments has also improved from previous quarters, but remains one of cautious optimism, with 40% of respondents reporting plans for capacity additions over the next six months, averaging 14% .
Global economic uncertainty caused by the Russian-Ukrainian war and rising COVID cases around the world have heightened volatilities affecting major economies.
High raw material prices, increased cost of finance, cumbersome regulations and permits, shortage of working capital, high logistics cost due to rising fuel prices and blocked shipping lanes, low domestic demand and world, excess capacity due to high volume of cheap imports into India, unstable market, high electricity tariffs, shortage of skilled labor, highly volatile prices of certain metals, etc. and other supply chain disruptions are some of the key constraints affecting respondents’ expansion plans.
The table below gives the average capacity utilization in Q4 2021-22 for various manufacturing sub-sectors.