In the second quarter of the Financial Year 2024, growth of India’s manufacturing sector accelerated and is likely to continue for the rest of the fiscal despite developed nations slowing down, said a survey by Ficci on Monday.

For the survey, as many as 79 per cent respondents reported a higher production level in Q2 FY24 compared to the year-ago period.

Advertisement

“The future investment outlook has also improved as compared to the previous quarter as over 57 per cent respondents reported plans for investments and expansions in the coming six months. This is also a slight improvement over the previous survey,” said the Ficci survey.

It is to be noted that the average capacity utilisation in manufacturing was over 74% in Q2 FY24, reflecting sustained economic activity in the sector. It is slightly higher than 73 per cent capacity utilisation reported in the previous quarters.

The survey said that electronics and white goods, cement, and automotive and machine tools displayed strong growth and are “clear outperformers”, whereas sectors like capital goods and construction machinery, chemicals, textiles, metals, paper and other sectors had moderate growth.

Over 40 per cent respondents said demand is a significant constraint despite exports doing better than previous quarters while over 48 per cent of respondents reported higher exports in Q2 as compared to 33 per cent in Q1.

Other constraints were high raw material prices, increased cost of finance, logistics, and other supply chain disruptions.

“Whether it is domestic demand or exports, this remains a major limiting factor. Further improvement in export demand is required in the light of the country’s growth aspiration,” said the survey.

The Ficci survey highlighted that around 38% of the respondents are considering hiring additional workforce in the next three months, but 18% of them feel that manufacturing lacks a skilled workforce.

“Nonetheless, high raw material prices and high energy cost are the two main factors contributing to the high production costs,” said the survey.

As many as 58 per cent manufacturers said in Q2 the cost of production as a percentage of sales increased, compared to 77 per cent respondents saying the same for the previous quarter.