The revival prospects for India’s manufacturing sector in the October-December quarter seem to be weakening mainly due to a sluggish exports scenario, according to FICCI.
“The percentage of respondents expecting higher growth in the December quarter has gone down to 55% against 63% for the previous three months,” the industry chamber said. “Exports are primarily responsible for this less optimistic outlook besides domestic factors like poor demand conditions, high interest costs etc,” it added.
Responses have been drawn from 336 manufacturing units from both large and small segments with a combined annual turnover of over Rs 3.94 lakh crore.
In terms of order books, 44% respondents reported higher order books for the October-December quarter which is almost the same as that of the previous three-month period, indicating a muted demand conditions, the survey noted.
The export outlook for manufacturing followed its trajectory downwards in the third quarter, with 24% of respondents expecting higher exports in the quarter compared to 36% in the previous quarter.
In terms of investment, 68% respondents in the third quarter said they do not have any plans for capacity additions for the next six months as compared to 73-75% in the previous quarters, signalling weak private sector investments in manufacturing.
Poor demand conditions, high cost of borrowing, delayed clearances and cost escalation are likely to hit companies’ expansions plans ahead, they added.