Manufacturing growth slowed down, says Ficci

According Ficci’s quarterly survey on Indian manufacturing sector, 32 per cent of respondents have reported that they are carrying more than their average inventory levels of finished goods than the earlier quarters.

Another 56 per cent said that their average inventory levels are the same. The study attributes this less than optimistic outlook to falling exports besides domestic factors like poor demand conditions, high interest cost etc.

The survey was conducted on 336 manufacturing units from both large and SME segments, with a combined annual turnover of over Rs 3.94 lakh crore took part in the study. The percentage of respondents expecting higher growth in Q3 has gone down to 55 per cent as compared to 63 per cent in the previous quarter.

The survey considered 12 major sectors for the study, namely textiles, capital goods, metals, chemicals, cement and ceramics, electronics, auto, leather and footwear, machine tools, food, tyre, and textiles machinery.

In terms of investment, for Q3 2015-16, 68 per cent respondents as against 73-75 per cent respondents in earlier quarters reported that they don’t have any plans for capacity additions for the next six months. This implies that the slack in the private sector investments in manufacturing will continue, even though there is a fall in the percentage of respondents not looking at fresh investments.

Poor demand conditions, high cost of borrowing, delayed clearances and cost escalation are some of the major constraints which are still affecting the expansion plans of the respondents.

In a separate study, industry body Assocham further lowered its outlook for India’s exports to $255-260 billion for 2015-16, which stood at $310 billion in the previous fiscal, disagreeing with the government's claim that there is “no crisis” on

the outward shipments front.