Outlook for Manufacturing Improves for Q4 of 2017–2018

FICCI’s latest quarterly survey assessed the expectations of manufacturers for Q4 (January–March 2017–2018) for 12 major sectors namely automotive, capital goods, and electronics and electricals, among others. Responses have been drawn from over 300 manufacturing units from both large and SME segments with a combined annual turnover of over Rs. 3 lakh crore.

In the electronics and electricals sector for Q4 2017–2018, about 71 percent respondents expect production to continue at the same level or increase as compared to the same quarter last year. The sector is utilizing about 76 percent of its installed capacity. Half of the firms reported maintaining the same installed capacity as compared to that of last year. 71 percent respondents are not planning to add capacity in the next 6 months. 67 percent respondents expect a rise in exports while rest reported exports to remain the same. Most respondents reported a fall in exports ranging between 0 and 5 percent during Q3 due to currency appreciation. 83 percent respondents mentioned that the imports of raw materials got cheaper by 0–5 percent. Despite that, 71 percent respondents reported a rise in the cost of production during Q3 due to high raw material prices, wage inflation, and higher import duties on raw materials. 57 percent of the respondents expect the sector to revive in the next 6 months. The rest believe it to follow the current growth path in the next 6 months. Suggestions to boost growth of manufacturing are – reduction in cost of finance especially for SMEs; delay in GST refunds has blocked working capital of industry, this needs to be expedited; rationalization of GST rates from 28 percent to 18 percent on domestic appliances; correcting inverted duty structure; need for labor reforms in the sector.

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