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Web Exclusive | February 2019

Industry's production front looks up

Hiring and production outlook is expected to be better, while exports will be affected due to global

demand factors in manufacturing sector in October-December this fiscal, said a Ficci survey. Ficci's

latest Quarterly Survey on Manufacturing presents a better outlook for hiring and production, the industry

body said in a statement. The survey portrays a better outlook for the manufacturing sector in Q-3

(October-December 2018-19) as the percentage respondents reporting higher output growth during the third

quarter was 54 per cent as compared to 47 per cent in the same period previous fiscal.

The percentage of respondents reporting low production was only 13.5 per cent in Q-3 2018-19 as compared

to 15 per cent in Q-3 of 2017-18. Similarly, on hiring front the outlook for the sector seems to have

slightly improved for near future. While in Q-3 of 2017-18, 70 per cent respondents mentioned that they

were not likely to hire additional workforce, this percentage has come down to 65 per cent for Q-3 of

2018-19. It is expected that hiring scenario will improve further, noted the Survey.

The study assessed the sentiments of manufacturers for Q-3 this fiscal, for eleven major sectors namely

automotive, capital goods, cement and ceramics, chemicals, fertilisers and pharmaceuticals, electronics &

electricals, leather and footwear, metal & metal products, paper products, textiles, textile machinery and

tyre. Responses have been drawn from over 300 manufacturing units from both large and SME segments with a

combined annual turnover of over 2.2 lakh crore.

In terms of order books, 43 per cent of the respondents in October-December 2018 are expecting higher

number of orders as against 42 per cent. The outlook for exports is somewhat stable as 36 per cent of the

participants are expecting a rise in exports for Q-3 2018-19 and 32 per cent are expecting exports to

continue on same path as that of same quarter last year, observed the survey.

However, it said the rupee depreciation has not led to any significant increase in exports as 78 per cent

of the respondents reported that the exports were not affected much by rupee depreciation. Thereby,

emphasizing that there were other global factors that are restricting growth of our exports. The survey

also said that the overall capacity utilisation in manufacturing remains low at 75 per cent in Q3. The

average capacity utilisation for the manufacturing sector in the last few quarters has been around 75 per

cent only. High raw material prices, cost of finance, uncertainty of demand, shortage of skilled labour,

high imports, requirement of technology upgradation, excess capacities, delay in disbursements of state

and central subsidies are some of the major constraints which are affecting expansion plans of the

respondents.


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