'Manufacturing to slow down again in third quarter'

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SME Times News Bureau | 11 Aug, 2012
India's manufacturing output, which contracted 0.7% in the last quarter and sharply in June, is likely to slow down again in the July-September period, mainly due to recent rupee depreciation that affected the sector's competitiveness severely over the last few months, according to a new survey.

With over 67% respondents found to be affected by rupee depreciation in the last few months, the findings of the latest survey, conducted by industry body FICCI, reflect that the manufacturing sector's performance in the third quarter would be impacted.

"Rupee depreciation has led to increased cost of their imported raw materials and inputs by 5-25% in last few months. Sectors which have been affected more by this depreciation are automotive, electronics, capital goods, chemicals and textiles," said FICCI.

"As against this, only 42% respondents said that the depreciation has helped in improving their exports," it added.

India's manufacturing output contracted 3.2% in June, with the capital goods sector leading the decline (-27.9%). In the April-June quarter, the decline rate was 0.7%.

The survey drew responses from 418 manufacturing units and associations. Responses have been drawn from 418 manufacturing units from both large and SME segments.

Around 44% respondents felt that they expect growth to be higher in Q-2 vis-a-vis last year as against 46% respondents saying so for previous quarter (Q-1). Only 36%, 13% and 26% respondents in quarter four, three and two of 2011-12 respectively expected growth to be higher in manufacturing, as per previous surveys.

The FICCI survey quarterly survey gauges the expectations of manufacturers for Q-2 (July-Sep 2012-13) for major sectors such as textiles, capital goods, metals, chemicals, tyres, cement, electronics, automotive, textiles machinery, leather & footwear, machine tools, paper, etc.