Moderate impact of RBI rate hikes on manufacturing: Ficci

The policy rate hike by RBI may have only moderate impact on growth of the manufacturing sector in October-December period as the segment reported higher order books over the previous quarter, a survey said.

As per the survey conducted by Ficci, 44 per cent respondents said the recent hike in RBI policy rates will have moderate impact on the cost of their borrowing and another 43 per cent felt that the impact is not going to be significant.

The survey covered 404 units across the sector.
    
"For 54 per cent respondents, orders books for the third quarter were more than the order books in the second quarter," the survey said.
    
The sectors which reported higher order books include capital goods, FMCG, cement, textiles industry and automobile.
    
On November 2, the Reserve Bank hiked its key short-term lending (repo rate) and borrowing rates (reverse repo) by 25 basis points each to rein in inflation. It was the sixth rate hike in 2010.
    
Over 46 per cent of the participants said that they plan to add to their existing capacities in the next six months as compared to 42 per cent respondents in the previous survey.
    
"However, the sector will see some moderation in the growth as 68 per cent respondents in Q3 as compared to 71 per cent in Q2 reported that the growth will be more vis-a-vis last year for respective quarters," it said.
    
In terms of capacity utilisation, over 52 per cent of the respondents said that they were operating at higher capacities currently over the year ago period.
    
Sectors that are likely to witness moderate growth (less than 12 per cent) in third quarter are textiles, textile machinery, cement,  chemicals and pharmaceuticals, metal, leather and paper industry, it added.
    
Exports growth, however, is likely to remain steady in October-December 2010-11 quarter.