DAIKIN

Electronics and electrical

For 2QFY19, all the respondents expect production to increase or remain same as compared to the same quarter last year. 90 percent respondents reported a rise in order books for 2QFY19. The sector is utilizing about 69 percent of its installed capacity. Half of the reported firms are maintaining same installed capacity as compared to that of last year. 90 percent of the respondents in this sector are not planning to add capacity in next 6 months.

43 percent of the respondents expect a rise in exports while 29 percent reported exports to remain the same as that of the last year in July–September quarter. Exports of 86 percent of the respondents did not increase despite rupee depreciation. Further, for the same percentage of respondents, imports of raw materials got expensive by 0–10 percent during the same period. Cost of production increased for half of the respondents due to high raw material prices, interest rates, high manpower cost and currency depreciation. 63 percent of the respondents were reportedly maintaining same level of inventories.

About three-fourth of the respondents were not having any plans of hiring additional work force in next 3 months. Industry’s respondents reportedly are availing credit at an average rate of around 10 percent per annum. 43 percent of the respondents expect the sector to revive in the next 6 months. Suggestions to boost growth of manufacturing are reduction of GST rate for manufacturing sector, better infrastructure such as transport and electricity, need for reducing rate of interest, need for labor reforms in the sector to introduce flexibility in labor laws, and inclusion of electricity in GST. High prices of raw materials, low domestic, and export demand and competition faced from imported goods are significantly affecting growth of this sector.

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