Q2 manufacturing outlook improves; cost of doing biz rises: Ficci survey

As per FICCI's latest quarterly survey, industry has attributed hike in production costs to high fixed costs, higher overheads for ensuring safety protocols, and reduction in volumes due to lockdown

The outlook for increased manufacturing activities in the second quarter of this fiscal has been significantly improved, though the cost of doing business and production is rising, according to a survey by industry chamber Ficci.

As per Ficci's latest quarterly survey (Q2) on manufacturing, industry respondents have attributed the hike in production costs primarily to high fixed costs, higher overhead costs for ensuring safety protocols, and a drastic reduction in volumes due to lockdown.

The hike was also attributed to lower capacity utilisation, high freight charges and other logistic costs, increased cost of raw materials, power cost, and high-interest rates.

It said that after experiencing subdued Q1 (April-June 2021-22), the outlook seems to have improved significantly in the second quarter (July-September), it said.

"However, the survey noticed a high percentage of respondents experiencing the rising cost of doing business and production," it said.

On exports, it said the outlook seems improving as around 58 per cent of the participants are expecting a rise in their outbound shipments during the second quarter.

"Hiring outlook for the sector remains subdued as 68 per cent mentioned that they are not likely to hire additional workforce in the next three months," the survey added.

Responses have been drawn from over 300 manufacturing units from both large and SME segments with a combined annual turnover of over Rs 2.7 trillion.