FICCI recently published their quarterly survey and depicted increased manufacturing in Q1 FY22 i.e. April-June 2022. The average expectation of increase in manufacturing was over 10%. 54.8% respondents of the survey reported higher production levels in the first quarter.
Another variable that showed improvement was the employment creation by the manufacturing sector, in comparison to numbers of the last financial year. For Q1 FY22, 53% respondents were planning on hiring additional workforce in the next 3 months.
The assessment is also reflected in order books as 55% of the respondents in Q1 FY22 are expecting a higher number of orders.
The FICCI survey assessed the sentiments of manufacturers for Q1 April-June (2022-23) for twelve major sectors namely automotive, capital goods, cement, chemicals, fertilisers and pharmaceuticals, footwear, machine tools, metal & metal products, paper products, textiles, toys, tyre and miscellaneous. Responses have been drawn from over 300 manufacturing units from both large and SME segments with a combined annual turnover of over ₹3 lakh crore.
Overall, the survey highlights increased manufacturing activity for the current financial year, in contrast to FY21, even with the presence of inexpedient situations currently prevailing around the world. The Russo-Ukranian war and ongoing bouts of pandemic in various other economies have negatively impacted the Indian manufacturing sector. The setbacks include rise in price of raw materials, high cost of finance, cumbersome regulations and clearances, shortage of working capital, high logistics cost due to rising fuel prices and blocked shipping lanes, low domestic and global demand, excess capacities due to high volume of cheap imports into India, unstable market, high power tariff, shortage of skilled labor, highly volatile prices of certain metals etc., among other supply chain disruptions.
While 80% of the respondents expect either more or the same level of inventory in Q1 April-June 2022-23, around 90% respondents expected either more or the same level of inventory during the previous quarter.
The outlook for exports seems to be positive as 53.4% of the respondents expect an average increase of 15.2% in exports in Q1 2022-23 as compared to the first quarter of last year.