Industry body, Federation of Indian Chambers of Commerce and Industry (FICCI) is not very confident about the manufacturing growth in the country. A survey released by it ahead of the release of the numbers for industrial production for the first quarter of 2012-13, states the lack of optimism among the respondents about high manufacturing growth in the second quarter, as against the previous round of survey.
According to the survey, which drew responses from 418 manufacturing units and associations, around 44% respondents felt that they expect growth to be higher in Q2 vis-a-vis last year as against 46% respondents saying so for previous quarter (Q1). Only 36%, 13% and 26% respondents in quarter four, three and two of 2011-12 respectively expected growth to be higher in manufacturing, as per previous surveys.
Also, over 67% respondents felt affected by the rupee depreciation in the last few months. The rupee depreciation has led to an increase in the cost of their imported raw materials and inputs by 5-25 per cent. As per the survey, demand conditions remained subdued in the economy for the manufacturing sector in Q2 as compared to previous quarters as only 31% respondents were having higher order books for July-September quarter.
On capacity utilization, the survey revealed that only 35% respondents reported higher utilization against 44% last year and 36% in previous quarter. This time only 28% respondents have reported plans for capacity addition against 38% desiring to do so during the last survey.
The employment prospects too remains weak as over 70% respondents did not report any plans for hiring new workforce in next three months, while only 30% reported that they are planning to increase their workforce in next 3 months.
Sectoral growth wise, in second quarter Chemicals, Food, Electronics, Textiles, Textiles Machinery, Paper and Capital Goods were having low expectation of growth, Steel & Metals and Automotive sectors were having moderate growth expectation, while Cement, Leather & footwear, Tyre and Machine Tools sector were expecting strong growth during second quarter.