The outlook for the country’s manufacturing sector in the April-June quarter of the current fiscal has moderated as only 41 per cent of respondents in a FICCI survey expected higher output growth during the ongoing quarter compared to 54 per cent in the January-March quarter, as per the industry chamber report released on Sunday.
The report said that the percentage of respondents expecting low or static production is 59 per cent in the first quarter of 2019-20, which was 46 per cent in the previous quarter.
In terms of order books, 36 per cent of the respondents during the quarter under review are expecting higher number of orders against 44 per cent in January-March 2019.
In terms of capacity utilisation, the FICCI survey noted that the overall capacity utilisation in manufacturing has witnessed a slight fall to 78 per cent during April-June, as compared to 80 per cent in the previous quarter.
The investment outlook too is marginally subdued for the April-June quarter compared to the year-ago period.
The latest quarterly survey assessed the sentiments of manufacturers for April-June, 2019-2020, for twelve major sectors. Responses have been drawn from over 300 manufacturing units among large, small and medium enterprises with a combined annual turnover of over Rs 3.5 lakh crore, FICCI said.
“Thirty seven per cent respondents reported plans for capacity additions for the next six months as compared to 40 per cent in Q4 of 2018-19,” said the survey.
“High raw material prices, high cost of finance, uncertainty of demand, shortage of skilled labour, high imports, requirement of technological upgradation, low domestic and global demand, excess capacities, delay in disbursements of state and central subsidies and competing countries such as Bangladesh and Vietnam enjoying lower wage cost and export benefits resulting in erosion of competitiveness of Indian exporters are some of the major constraints which are affecting expansion plans of the respondents,” it said.
Sector-wise, the survey showed that people in the manufacturing sector, expect the electronics and electricals segment to register strong growth during the ongoing quarter, whereas most other sectors are likely to have either moderate or low growth.
Textiles, chemicals, fertilizers and pharmaceuticals, capital goods, paper products, cement and ceramics are expected to register moderate growth while automive, metal and metal products, medical devices and leather and footwear are likely to witness low growth, the survey showed.