India’s manufacturing outlook improves in Oct-Dec 2021: FICCI

Respondents from 300 SMEs participated in the survey and provided insights on export growth, hiring and other trends

January 30, 2022

50% of the respondents anticipated an increase in exports during the third quarter of the fiscal year.

Increased production and logistics costs, capital shortage and demand fluctuations were the key points of concern highlighted.

75% of the respondents highlighted that they were unlikely to hire any new talent owing to high production costs.

October 2021 saw a remarkable increase in manufacturing activity and exports.

The capacity utilization potential of the manufacturing sector is seen to have increased by 65-70% during the October-December 2021 quarter according to a recent FICCI survey. The survey also highlighted a doubling in the percentage of respondents indicating an increase in production (63%) in comparison to the previous year (33%). 50% of the respondents have also indicated that they are expecting an increase in exports during the third quarter of the fiscal year. The trends recorded in the report also reveal several industrial pain points such as increased production and logistics costs, fluctuation in demand, supply chain disruptions, increase in power tariffs and raw material prices as well as shortage in capital. Of the respondents from 300 Small and Medium Enterprises (SMEs), 75% indicated remote possibilities of hiring new talent owing to an increase in production costs as against sales volume. 

Manufacturing activity is seen to have increased from 53.7% in September to 55.9% in October, marking significant progress since February. Demand at the national and global levels is seen to have risen and entities have increased the pace of stock-building and input purchase. However, firms continued to report an increase in input costs and transportation costs. Analyst firm IHS Markit observed that the period also saw a remarkable increase in exports.