Cost of doing biz remains a major concern

New Delhi: The outlook for India's manufacturing sector seems to have improved in the October-December 2021 quarter even as the cost of doing business remains a cause for concern and hiring prospects remain subdued, according to a Ficci survey.

The findings of the latest quarterly survey on manufacturing unveiled on Sunday also reflect sustained economic activity in the sector, with existing average capacity utilisation in the range of 65 to 70 per cent. It also highlighted that manufacturers are looking forward to the upcoming Union Budget to enhance growth and investments in the sector. The Budget will be presented on February 1. The percentage of respondents reporting higher production in the third quarter of 2021-22 (October-December 2021-22) was around 63 per cent, almost double than the year-round period (around 33 per cent), noted Ficci.

This assessment is also reflective in order books as 61 per cent of the respondents in October-December 2021-22 had a higher number of orders as against July-September 2021-22, the survey found. High raw material prices, high cost of finance, the uncertainty of demand, shortage of working capital, high logistics cost, low domestic and global demand due to supply chain disruptions are some of the major constraints that are affecting the expansion plans of the respondents, it said. The survey assessed the performance and sentiments of manufacturers for Q3 (October-December 2021-22) for 12 major sectors namely automotive, capital goods, cement, chemicals, fertilisers and pharmaceuticals, electronics & electricals, medical devices, metal & metal products, paper products, textiles, textiles machinery and miscellaneous. Responses have been drawn from over 300 manufacturing units from both large and SME (small and medium enterprise) segments with a combined annual turnover of over Rs 2.7 lakh crore.