In a significant move to capture the evolving landscape of consumer behaviour, India is gearing up for a comprehensive reassessment of its Consumer Price Index (CPI).
FICCI’s latest quarterly survey on manufacturing sector reveals that after experiencing revival of Indian manufacturing in the first three quarters of 2021-22, momentum of growth continued in subsequent quarters of Q-4 (Jan-Mar 2021-22) and Q-1 April-June (2022-23) and there seems to be an improvement in hiring/employment outlook after a long gap.
The survey noted that 54.8% of respondents reported higher production levels in Q-1 (April- June 2022-23), with an average expectation of an increase in production by over 10%. This is slightly more than the percentage of respondents experiencing higher growth in Q-1 of last year.
Also, the FICCI survey observed that there seems to be an improvement in employment creation by the sector as compared to the previous quarter (Q-3 of 2021-22), where only 25% of the respondents were looking at hiring in the next few months.
This percentage has improved significantly to 53% of the respondents in Q-1 2022-23 who are now looking at hiring an additional workforce in the next three months. This assessment is also reflective in order books as 55% of the respondents in Q-1 (April-June 2022-23) are expecting higher number of orders, the survey noted.
FICCI’s latest quarterly survey assessed the sentiments of manufacturers for Q-1 April-June (2022-23) for twelve major sectors namely automotive, Capital Goods, cement, chemicals, fertilizers and pharmaceuticals, footwear, machine tools, metal & metal products, paper products, textiles, toys, tyre and miscellaneous. Responses have been drawn from over 300 manufacturing units from both large and SME segments with a combined annual turnover of over 3 lakh crores.
Capacity Addition & Utilization
The existing average capacity utilization for Q4 2021-22 in manufacturing is 77%, a little higher than 75% in the previous quarter, which reflects increased economic activity in the sector. The future investment outlook also improved as compared to previous quarters but remains that of cautious optimism, as 40% of respondents reported plans for capacity additions in the next six months, by 14% on an average.
Global economic uncertainty caused by the Russia-Ukraine War and increasing cases of COVID worldwide have accentuated the volatilities impacting the major economies.
High raw material prices, increased cost of finance, cumbersome regulations, and clearances, shortage of working capital, high logistics cost due to rising fuel prices and blocked shipping lanes, low domestic and global demand, excess capacities due to a high volume of cheap imports into India, unstable market, high power tariff, shortage of skilled labor, highly volatile prices of certain metals etc. and other supply chain disruptions are some of the major constraints which are affecting expansion plans of the respondents.
The table below, gives average capacity utilization in Q4 2021-22 for various sub-sectors of manufacturing.