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.