Green shoots of recovery visible in manufacturing: Industry

Green shoots of revival have started to appear in the manufacturing sector, which is critical for job creation, with a majority of segments likely to post higher output, according to industry bodies.

The survey conducted by CII-Ascon for the April-June quarter indicates positive growth in important sectors like consumer durables including the vehicle industry and white goods industry, which recorded a growth of 5-10%, leading to improvement in the overall industry growth.

The Ficci survey found that eleven out of fourteen sectors are likely to show improvement in production during the second quarter (Jul-Sept) of the current fiscal.

Over 64% respondents are not likely to hire additional workforce in the next three months, though this proportion is less than that of the previous quarter (75%), indicating improvement in hiring outlook in coming months.

The survey gauges the expectations of manufacturers for Q2 for fourteen major sectors namely textiles, capital goods, metals, chemicals, cement, electronics, automotive, leather & footwear, machine tools, FMCG, tyre, textile machinery, etc.

Responses have been drawn from 392 manufacturing units from both large and small & medium (SME) segments with a combined annual turnover of over Rs 4 lakh crore.

An upturn in demand condition is also reflected in the improved order books of the manufacturers, said Ficci survey.

While only 36% respondents reported higher order books for the April-June quarter in the last survey, 43% respondents reported higher order books for July-September quarter.

Meanwhile, the CII-Ascon survey found that sub sectors such as tablets, LEDs and LCDs, smartphones have achieved phenomenal growth of over 20%. The passenger car segment also for the first time in last two years has grown between 5-10%.

The good growth of automobile industry is driven by the excise duty cuts announced during the interim budget and its extension during the recent budget of the new government. The excise duty stimulus also comes as a respite to the capital goods sector as well as the white goods segment.

However, core sectors continue to remain under stress lying in the low-growth category. The capital goods sector too, has shown stability in its growth (0 to 9%), which also improves the overall industry sentiment, the survey found.

The survey indicates that the industrial activity in the country has posted a positive growth. This is a clear shift from the growth trends witnessed during the last quarter (Jan-March 2014), which presented a dismal industrial growth.

The CII-Ascon survey categorises the growth range in four broad categories, namely excellent (over 20%), good (10-20%), low (0-10%), and negative. It covered 111 industry segments.