Manufacturing in India Shows Improvement in 2024: FICCI Survey
A recent survey by FICCI reveals that manufacturing sentiments in India have improved in the first quarter of the financial year 2024-25. About 78% of respondents expect higher or unchanged production levels, and 67% anticipate more orders.
Survey Details
The survey assessed sentiments across eight major sectors: Automotive & Auto Components, Capital Goods & Machine Tools, Cement, Chemicals, Fertilizers & Pharmaceuticals, Electronics & Electricals, Metal & Metal Products, and Textiles, Apparels & Technical Textiles. Responses were gathered from manufacturing units of both large and SME segments, with a combined annual turnover exceeding Rs. 3 lakh crore.
Key Findings
The current average capacity utilization in manufacturing is close to 75%, reflecting sustained economic activity. The investment outlook is positive, with 41% of respondents planning investments and expansions in the next six months. However, challenges such as high interest rates, delays in customer payments, and logistical problems were noted.
In terms of inventory, 86% of respondents had either increased or maintained inventory levels in Q4 2023-24, and about 83% expect higher or unchanged inventory levels in Q1 2024-25. For exports, 56% reported increased exports in Q4 FY 2024, and around 70% expect higher exports in Q1 2024-25.
Challenges and Costs
The average interest rate paid by manufacturers is reported to be 9.8%. Over 80% of respondents have sufficient availability of funds from banks. Production costs remain high, with nearly 60% of respondents reporting an increase in production costs as a percentage of sales. Factors include increased prices for raw materials, rising wages, and higher logistics expenses.
Workforce and Labor
The hiring outlook is positive, with nearly 50% of respondents planning to hire additional workforce in the next three months. Most sectors do not face a shortage of labor, but 17% noted a lack of skilled labor, indicating a need for increased efforts at both government and industry levels.
Doubts Revealed
FICCI -: FICCI stands for the Federation of Indian Chambers of Commerce and Industry. It is an organization in India that helps businesses grow and represents their interests.
Survey -: A survey is a way to collect information by asking people questions. In this case, FICCI asked businesses about their manufacturing activities.
Manufacturing -: Manufacturing is the process of making products, usually in factories. It includes making things like cars, clothes, and electronics.
Financial year 2024-25 -: A financial year is a 12-month period used for accounting purposes. In India, it starts on April 1 and ends on March 31 of the next year. So, 2024-25 means from April 1, 2024, to March 31, 2025.
Respondents -: Respondents are the people who answer the questions in a survey. In this case, they are people from manufacturing companies.
SME -: SME stands for Small and Medium-sized Enterprises. These are smaller businesses that are not as big as large companies but still play an important role in the economy.
Interest rates -: Interest rates are the cost of borrowing money. High interest rates mean it is more expensive for businesses to take loans.
Logistical issues -: Logistical issues refer to problems in the process of moving goods from one place to another. This can include transportation delays or storage problems.
Outlook -: Outlook means the future expectations or predictions. In this case, it refers to what businesses expect to happen in terms of investment, hiring, and exports.
Exports -: Exports are goods that are made in one country and sold to other countries. For example, India might export clothes or electronics to other countries.