Guwahati: FICCI's most recent quarterly survey on the manufacturing sector reveals that after experiencing a revival in Indian manufacturing in the first three quarters of 2021-22, the momentum of growth continued in the subsequent quarters of Q-4 (Jan-Mar 2021-22) and Q-1 (April-June (2022-23), and there appears to be an improvement in hiring and employment outlook after a long gap.

The study reveals that 54.8 percent of respondents indicated increased production levels in Q-1 (April-June 2022-23), with an average estimate of a 10% rise in output.

In addition, the FICCI study found that there appears to be an increase in job creation by the industry when compared to the previous quarter (Q-3 of 2021-22), when just 25% of respondents were planning to hire in the next few months. This figure has increased dramatically to 53 percent of respondents in Q-1 2022-23 who are looking to hire more workers in the next three months.

This judgment is reflected in order books, as 55 percent of respondents in Q-1 (April-June 2022-23) foresee a larger quantity of orders, according to the poll.

The latest quarterly survey from FICCI assessed manufacturers' sentiments for Q-1 April-June (2022-23) for twelve major sectors: Automotive, Capital Goods, Cement, Chemicals, Fertilizers and Pharmaceuticals, Footwear, Machine Tools, Metal & Metal Products, Paper Products, Textiles, Toys, Tyre, and Miscellaneous.

Over 300 manufacturing enterprises from both the major and SME categories responded, with total annual revenue of more than 3 lakh crores. The current average capacity utilisation in manufacturing for Q4 2021-22 is 77 percent, slightly higher than the previous quarter, reflecting increasing economic activity in the sector.

The future investment outlook increased in comparison to prior quarters.

The global economic instability generated by the Russia-Ukraine war and rising cases of COVID throughout the world has heightened the volatility affecting the main economies.

High raw material prices, increased financing costs, burdensome regulations and clearances, a lack of working capital, high logistics costs due to rising fuel prices and blocked shipping lanes, low domestic and global demand, excess capacity due to a large volume of cheap imports into India, an unstable market, high power tariffs, a shortage of skilled labour, highly volatile prices of certain metals, etc., and other supply chain disruptions are some of the major constraints.

In Q-1 April-June 2022-23, 80 percent of respondents predict either more or the same level of inventory, which is somewhat lower than the previous quarter when 90 percent of respondents expected either more or the same level of inventory.

The forecast for exports appears to be optimistic, with 53.4 percent of respondents expecting an average 15.2 percent growth in exports in Q-1 2022-23 compared to the first quarter of last year.

The average interest rate paid by manufacturers has risen to 9.69 percent per annum, up from 8.4 percent per annum in the previous quarter, while the maximum rate at which a loan has been hiked is 16 percent per annum.

Approximately 70% of respondents reported high lending rates.
Almost all sectors are expected to develop moderately to strongly in Q-1 2022-23, with the exception of a few, as shown in the table below.

In Q-4 2021-22, the cost of manufacturing as a proportion of sales for manufacturers in the survey has grown for 91 percent of respondents.

While 77 percent of our respondents stated that they have no concerns with workforce availability, the remaining 23 percent believe that there is a shortage of trained workers in their industry.

Overall, the study reported a moderate to strong growth in Q1 2022-23 excluding a few segments.