Manufacturing output to remain subdued in Q4: FICCI

NEW DELHI, INDIA: India's manufacturing output is likely to remain subdued in the fourth quarter of the current financial year due to sluggish demand and high input costs, a survey conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI) has revealed.

While upturn is seen in some sectors like leather, textiles, food products and cement, major segments such as automotive and capital goods are expected to witness sluggish growth in the quarter ending March 31.

Thirty-six percent of respondents expect higher level of production in the fourth quarter of 2012-13, while 20 percent of them expect a fall in output.

The demand conditions remain subdued but some improvement is witnessed in the fourth quarter of the current financial year as compared to the previous quarter, FICCI said in the survey report.

The quarterly survey gauges the expectations of manufacturers for January-March period for major sectors such as textiles, capital goods, metals, chemicals, tyres, cement, electronics, automotive, leather and footwear, machine tools, food, ceramics and textiles machinery.

"Responses have been drawn from 327 manufacturing units from both large and small and medium enterprises (SME) segments," FICCI said.

According to the survey manufacturers are looking at optimal utilisation of existing capacities rather than any fresh investments. The current average capacity utilisation as reported in the survey is around 74 percent for manufacturing.

A majority 76 percent of the respondents are not likely to hire new workforce in next three months. This proportion has increased as compared to previous survey in which around 70 percent respondents did not expect to hire new workforce in coming months.

As regard inventories, around 30 percent respondents said they were carrying more than their average levels of inventories and another 50 percent are maintaining their average levels of inventories.

Higher than average inventory levels are reported particularly in sectors like automotive, capital goods, metals and textiles machinery. Whereas, sectors like leather, cement and textiles have reported less than their average levels of inventories.