Indian Manufacturing Sector Continues Growth Journey: FICCI Manufacturing Survey

22 February 2025: FICCI’s latest Quarterly Survey on Manufacturing (QSM) indicates sustained growth and higher optimism for India’s manufacturing sector for Q-3 2025. In comparison to Q3 FY 2024, when 73% of respondents reported higher production levels, approximately 83% of respondents reported either higher or same production levels in Q3 FY 2025. This was the second highest index in the last few months, indicating continued growth path for the sector in months to come, noted the survey. In addition, the investment outlook for manufacturing also looks stable with 42% of respondents indicating plans for investments and expansions in the next six months.

Domestic demand conditions show optimism in Q3 2024-25, however going forward demand could be an issue. This assessment of Indian manufacturing is also reflected in the higher order books. 83% of the respondents are expecting a higher number of orders in Q3 FY 25 compared to the previous quarter.

FICCI’s latest Quarterly Survey on Manufacturing (QSM), which is the 64th edition of the survey, assessed the performance of manufacturers for Q3 Oct-Dec 2024-25 for eight major sectors namely, Automotive & Auto Components, Capital Goods, Chemicals, Fertilizers & Pharmaceuticals, Electronics & Electricals, Machine Tools, Metal & Metal Products, Textiles, Apparels & Technical Textiles and Miscellaneous. Responses have been drawn from manufacturing units from both large and SME segments with a combined annual turnover of over Rs. 4.7 lakh crores.

Capacity Addition & Utilization

The existing average capacity utilization in manufacturing is around 75%, which reflects sustained economic activity in the sector. This is more or less the same as last time. The future investment outlook is also positive, with 42% of respondents indicating plans for investments and expansions in the next six months.

Challenges faced by respondents in expanding capacities include rising raw material costs, high interest rates, which are creating financial pressures. Respondents expect weak domestic and export demand, further contributing to market uncertainties going forward. This hopefully will be addressed through slew of measures announced in the recent budget. The availability of skilled labor remains a significant concern, alongside regulatory complexities such as lengthy approval processes and non-tariff barriers. Additionally, limited access to advanced machinery, high land prices and competitive pressures from countries benefiting from trade advantages are impacting pricing and profitability, making expansion efforts difficult.

Exports

In exports, about 65% respondents reported higher exports in Q2 FY 2024-25 and in Q3 2024-25, more than 70% of the respondents expect their exports to be higher as compared to previous year’s similar quarters.

Hiring

35% of the respondents are looking at hiring an additional workforce in the next three months.

www.ficci.in