Manufacturing sees slight decline: Ficci

Inventory levels have seen a sharp rise, says report

Manufacturing sees slight decline: Ficci

An industry survey on Monday indicated a slight decline in India’s manufacturing in the January-March quarter, according to the official data which is yet to be released.

Increased cost of production due to rise in minimum wages and raw material cost is likely to impact manufacturing, said a Ficci survey.

Ficci’s latest quarterly survey assessed the expectations of manufacturers for the fourth quarter (January-March 2016-17), for 12 major sectors namely auto, capital goods, cement and ceramics, chemicals, electronics and electricals, food products, leather and footwear, machine tools, metal and metal products, paper products, textiles and technical textiles, and textiles machinery.

Responses were drawn from 320 manufacturing units from both large and SME segments with a combined annual turnover of over Rs 3.8 lakh crore.  The slight dip in the outlook for manufacturing production in the fourth quarter of the financial year just gone by is attributable primarily to rising cost of production to a little extent to uncertain outlook on export front.

The percentage of respondents reporting fall in exports has reduced from 30% in the previous quarter to 18% in the January-March quarter.

Order books
In terms of order books, it was found to be 47% respondents in the January-March quarter compared with 48% respondents in the October-December quarter of last year.

Inventory levels have seen a sharp rise. Some 97% respondents in Q3 (October-December 2016) compared with 81% respondents in Q2 (July-September 2016) have maintained either more or same levels of inventory as their average inventory levels.
This is much more than the average levels that was maintained by the industry in earlier quarters, the survey said.

Export outlook for the third quarter’s manufacturing also witnessed a fall as the proportion of respondents expecting higher exports in the fourth quarter (2016-17) was 40% compared with 46% in the third quarter of 2016-17, and 41% in second quarter of 2016-17.

Hiring outlook remains subdued in manufacturing in the coming months as 77% of the participants have  said that they were unlikely to hire additional workforce in the next three months. The proportion remained almost similar to the one recorded for Q3 and Q2 of last year.
DH News Service

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