Only 25% cos plan capacity addition in next 6 months: Ficci

Around 79% companies surveyed not likely to hire additional workers in next three months

A Ficci poll has revealed that the manufacturing sector is expected to witness subdued investment for a few more months, with only 25% companies planning capacity addition in the next six months.

"Delay in regulatory clearances, poor demand conditions and high cost of borrowing are some of the major constraints which are affecting expansion plans of the respondents," the survey said.

Moreover, hiring outlook seems pessimistic in coming months as around 79% companies surveyed are not likely to hire additional workers in the next three months. This proportion is slightly less than that of the previous quarter (80%), but still remains too high.

Noting that weak export outlook is weighing on manufacturing growth, the survey said "the manufacturing sector, as in the previous quarters, is expected to witness subdued investments at least for a few months more... Only 25% respondents reported any plans for new investments in the next six months, a slight dip in the last few quarters".

As much as 75% respondents said they do not have any plans for capacity addition for the next six months, as against 73% and 74% in Q4 and Q3 of 2014-15, respectively.

The quarterly survey assessed various parameters of manufacturers for 13 major sectors, including textiles, capital goods, metals, chemicals, cement and ceramics, electronics, auto, leather and footwear, machine tools, food, tyre, paper and textiles machinery.

Respondents have been drawn from 386 manufacturing units from both large and SME segments, with a combined annual turnover of over Rs 4 lakh crore.

"In the previous survey, outlook on the export front remained positive and seemed to have improved somewhat in Q4, which does not seem to be the case now," the survey said.

The respondents with higher exports in Q1 of 2015-16 stood at 33% compared with 45% and 43% in the previous two quarters (Q4 and Q3 of 2014-15, respectively).

However, at the same time, growth is expected to continue.

"It is not just domestic factors, but more importantly the outlook seems to be weakening on the export front, as a result of which manufacturing growth is likely to be pulled down," the survey noted.

In terms of order books, 44% respondents reported higher orderbook for April-June of 2015-16, which is slightly higher than the previous quarter.