Manufacturing Sector Witnessed Recovery During Q3 Of 2020-21

The manufacturing sector witnessed some recovery during the July-September quarter compared to the preceding quarter, according to FICCI's latest quarterly survey on manufacturing.

The percentage of respondents reporting higher production in the second quarter of 2020-21 increased in recovery compared to the first. The proportion of respondents reporting higher output during July-September rose to 24 percent, as compared to 10 percent in Q1 of 2020-21.

The percentage of respondents expecting low or same production is 74 percent in Q2 2020-21, as against 90 percent in Q1 of 2020-21.

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The overall capacity utilization in manufacturing has witnessed a rise to 65 percent as compared to the preceding two quarters. During the first quarter of the current fiscal, manufacturing, other than the essential goods, was nearly halted and in the fourth quarter of FY20, capacity utilization was recorded at 61.5 percent.

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The survey, however, found that the future investment outlook is subdued as only 18 percent of respondents reported plans for capacity additions for the next six months as compared to 22 percent in the previous quarter.

Further, high raw material prices, high cost of finance, shortage of skilled labor and working capital, high logistics cost, low domestic and global demand due to imposition of lockdown across all countries to contain the spread of coronavirus along with other factors have been major constraints affecting expansion plans of manufacturing businesses.

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The FICCI survey showed that around 77 percent of the respondents had either more or the same level of inventory in July-September 2020, whereas around 74 percent of the respondents maintained either more or the same level of inventory in the April-June quarter of 2020-21. (IANS)