India’s manufacturing sector showed recovery in the July-September quarter amid easing of lockdown curbs and a falling transmission of the virus, according to a report. This holds several social and economic impact as a growth in the manufacturing sector would enable a positive outlook on the entire Indian market and employment opportunities can also open up, though hiring outlook is still an area of concern.
Industry body FICCI’s latest quarterly survey on manufacturing indicates an entire recovery of the manufacturing sector in the second quarter as compared to the previous quarter. A significant increase in the proportion of respondents reporting higher output during July-September rose to 24 percent, as compared to 10 percent in the previous quarter has been reported by the survey. The survey revealed that the percentage of respondents who were expecting low or same production is 74 percent in the second quarter against 90 percent in the first quarter of 2020-21 showing signs of a post-lockdown recovery.
Also significant is the fact that the percentage of respondents expecting an increase in exports in July-September has increased substantially to 24 percent when compared to the previous quarter when just 8 percent of respondents were expecting a rise in exports. However, the hiring outlook for the sector still shows a bleak picture as 80 percent of the respondents mentioned that they will not hire an additional workforce in the next three months.
This survey represents a slightly improved situation in the hiring scenario as compared to the previous quarter Q-1 of 2020-21 when 85 percent of the respondents were not willing to hire an additional workforce, reports FICCI. Based on expectations in different sectors, all the sectors with the exception of the medical devices sector are likely to register low growth in Q-2 2020-21. The primary reason for such expectations is the COVID19 imposed lockdown, subdued demand, restriction in exports, and various other guidelines that are operational as a response towards the COVID19 outbreak.
The survey covered extensive areas of relevance for manufacturing like exports, capacity utilization, ongoing restrictions, availability of labor/ workforce, and others. It is seen in many of the above areas there are signs of operations inching towards normal and in coming months could bring about better performances. Various responses were drawn from over 300 manufacturing units from both large and SME segments with a combined annual turnover of around Rs 3 lakh crore.
The future investment outlook is very much subdued with only 18 percent of respondents reporting plans for growth and capacity additions for the next six months as compared to 22 percent in the previous quarter. This subdued growth can be attributed to high raw material prices and cost of finance, an acute shortage of skilled labor and working capital, high and low domestic and global demand due to the imposition of lockdown across several countries, lack of financial assistance, act as major constraints affecting expansion plans of the respondents.
