‘India’s manufacturing sector on wane in December quarter’
29 Dec 2015 5:05 AM IST
The revival prospects for India’s manufacturing sector in the October-December quarter seem to be weakening mainly due to a sluggish exports scenario, according to Ficci.
The industry chamber in a survey had earlier indicated a revival in the manufacturing activity in the second quarter of the ongoing fiscal, which seems to be slowing down little bit in the October-December period, as a lesser percentage of respondents expect high growth to continue in the quarter under review.
“The percentage of respondents expecting higher growth in the December quarter has gone down to 55 per cent as compared to 63 per cent for the previous three months,” Ficci said.
“Exports are primarily responsible for this less optimistic outlook besides domestic factors like poor demand conditions, high interest costs etc,” it added.
The latest quarterly survey gauges the expectations of manufacturers for the third quarter for twelve major sectors namely textiles, capital goods, metals, chemicals, cement and ceramics, electronics, auto, leather and footwear, machine tools, food, tyre and textiles machinery.
Responses have been drawn from 336 manufacturing units from both large and SME segments with a combined annual turnover of over Rs 3.94 lakh crore. In terms of order books, 44 per cent respondents reported higher order books for the October-December quarter which is almost the same as that of the previous three-month period, indicating a muted demand conditions, the survey noted.
The export outlook for manufacturing followed its trajectory downwards in the third quarter, as the proportion of respondents expecting higher exports in the quarter is 24 per cent as compared to 36 per cent in the September quarter and 33 per cent in April-June of the current fiscal.
“Though, the proportion of respondents expecting lower exports has also gone down from 43 per cent in the second quarter of 2015-16 to 37 per cent in the December quarter, the scenario remains bleak as percentage of respondents expecting no change in their export level has also increased,” Ficci stated.
In terms of investment, 68 per cent respondents in the third quarter said that they do not have any plans for capacity additions for the next six months as compared to 73-75 per cent in the previous quarters, implying slack in the private sector investments in manufacturing to continue.
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.
Based on expectations in different sectors, the survey pointed out that ten out of twelve sectors were likely to witness low to moderate growth (less than 10 per cent). Two sectors namely, capital goods and auto are likely to witness strong growth of over 10 per cent in the third quarter, it said.
Assocham revises FY16 export outlook downwards to $255-260 bn
Industry body Assocham has 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. Assocham in September this year had forecast the country’s exports to be around $265-268 billion. Cumulative value of exports during April-November 2015-16 stood at $174.30 billion as against $213.77 billion in the same period last year, down 18.46 per cent.
Contraction in exports continued for the 12th month in a row in November as outward shipments shrank 24.43 per cent to $20.01 billion amid a global demand slowdown. “Given the further decline in the last few months, the chamber is revising its outlook downward, disagreeing with a pre-dominant government view as if there is no big problem in the sector,” Assocham stated. Facing flak for 12 straight months of decline in exports, the government had recently said there is “no crisis” in India on the export front and there is “no need for alarm”. “There is no crisis in India on the export front and while there is a need for caution, there is no need for alarm,” the Commerce Ministry had said in a statement.
Next Story
