A recent study found that, despite the focus on labor-intensive manufacturing in the Union Budget 2024–2025, manufacturing sentiment in the nation improved in the April–June quarter.
Nearly 78% of respondents in the Q1 FY25 expected either greater or steady output levels compared to the same period last year, according to FICCI’s “Quarterly Survey on Manufacturing.”
Additionally, it demonstrated confidence regarding domestic demand conditions for Q1, with approximately 67% of respondents anticipating more orders than in the previous quarter.
According to the poll, demand conditions are still robust and could get even stronger as the monsoon moves forward.
Infrastructure spending, support for the rural economy, and the emphasis on job creation programs are all viewed as significant steps that will increase consumption and economic activity. According to the report, the Budget’s tax benefits for the middle class also gave consumers additional purchasing power.
As a result of persistent economic activity, the average capacity utilization in manufacturing is currently close to 75%. According to the poll, 41% of respondents said they had plans to make investments and expand over the next six months, showing an optimistic view for future investments.
The FICCI study indicates that the majority of industries do not have a labor shortage because 83% of participants said there were no problems with the availability of workers. But 17% of respondents said their industry lacked skilled workers, highlighting the necessity for more efforts from the government and business community.
The results indicate that rising wages, higher utility and energy costs, higher prices for scrap and chemicals, as well as higher prices for raw materials including iron, steel, rubber, carbon, and chemicals, all contribute to higher manufacturing costs.
As stated in the interim budget, the government has developed a package for MSMEs in the Budget 2024 that includes funding, adjustments to regulations, and technical support to help them expand and compete globally.
Customs duty recommendations aim to safeguard domestic manufacturing, enhance local value addition, boost export competitiveness, and streamline taxation while prioritizing the interests of the public and consumers.
In the Budget, the administration highlighted manufacturing and services as well as nine other priority areas.
The creation of jobs is the Modi government’s main objective, and the industrial sector will be crucial to this effort.
This month, a different survey revealed that business activity reached a three-month high in July thanks to a boom in the services sector and increased manufacturing, which resulted in the quickest hiring pace in 18 years by enterprises.
According to the HSBC survey, increased business activity in the manufacturing sector drove the July production growth, but the rate of expansion in the services sector also accelerated and stayed considerably above its long-run average.
The nation’s economy has become the fastest-growing major economy globally, with growth rates of over 8% projected for 2023–2024.
