The manufacturing sector in India continues to exhibit a positive growth sentiment for the fourth quarter of fiscal year 2025-26, despite concerns over rising input costs, according to the latest survey by the Federation of Indian Chambers of Commerce and Industry (FICCI).
Key Findings of the Survey
The FICCI survey, which gathered responses from manufacturers across various sectors, revealed that the overall business confidence remains robust. A majority of respondents reported an improvement in order books, both domestic and international, indicating sustained demand. The export outlook also appears promising, with many firms expecting higher overseas shipments in the coming months.
However, the survey highlighted that rising costs of raw materials and logistics are a major concern for the industry. Manufacturers are grappling with higher input prices, which are squeezing profit margins. Despite this, most firms plan to pass on some of the cost increases to consumers, which could fuel inflationary pressures.
Sector-wise Performance
The survey covered sectors such as automotive, capital goods, chemicals, textiles, and electronics. Among these, the automotive and electronics sectors reported the strongest growth expectations, driven by robust domestic demand and government incentives. The textiles sector, however, expressed caution due to global demand uncertainties and competition from other countries.
Capital goods manufacturers also indicated a positive outlook, supported by increased infrastructure spending and private investment. The chemicals sector, while optimistic, flagged concerns about volatile global prices and supply chain disruptions.
Employment and Capacity Utilization
On the employment front, the survey noted that a significant number of firms plan to hire additional workers in the next quarter, reflecting confidence in future demand. Capacity utilization levels have also improved, with many companies operating at near-optimal levels. This suggests that the manufacturing sector is operating on a strong footing, with potential for further expansion.
Challenges and Policy Recommendations
Apart from rising costs, manufacturers highlighted challenges such as regulatory compliance, availability of skilled labor, and access to finance. FICCI has urged the government to take measures to stabilize input prices, simplify tax procedures, and enhance skill development programs. The industry body also called for easier credit access for small and medium enterprises (SMEs) to support their growth.
The survey underscores the resilience of India's manufacturing sector amid global headwinds. While cost pressures remain a concern, the overall sentiment is positive, driven by strong domestic demand and export opportunities. Policymakers and industry stakeholders will need to collaborate to address the challenges and sustain the growth momentum.
