New Delhi: FICCI’s latest quarterly survey on Manufacturing sector reveals that after experiencing revival of Indian manufacturing in the first three quarters of 2021-22, momentum of growth continued in subsequent quarters of Q-4 (Jan-Mar 2021-22) and Q-1 April-June (2022-23) and there seems to be an improvement in hiring/employment outlook after a long gap.

The survey noted that 54.8% respondents reported higher production levels in Q-1 (April- June 2022-23), with an average expectation of increase in production by over 10%. This is slightly more than the percentage of respondents experiencing higher growth in Q-1 of last year. Also, FICCI survey observed that there seems to be an improvement in employment creation by the sector as compared to the previous quarter (Q-3 of 2021-22), where only 25% of the respondents were looking at hiring in next few months. This percentage has improved significantly to 53% of the respondents in Q-1 2022-23 who are now looking at hiring additional workforce in the next three months. This assessment is also reflective in order books as 55% of the respondents in Q-1 (April-June 2022-23) are expecting higher number of orders, survey noted.

FICCI’s latest quarterly survey assessed the sentiments of manufacturers for Q-1 April-June (2022-23) for twelve major sectors namely Automotive, Capital Goods, Cement, Chemicals, Fertilizers and Pharmaceuticals, Footwear, Machine Tools, Metal & Metal Products, Paper Products, Textiles, Toys, Tyre and Miscellaneous. Responses have been drawn from over 300 manufacturing units from both large and SME segments with a combined annual turnover of over 3 lakh crores.

Figure: % of Respondents Expecting Higher Production in the Quarter

vis-à-vis Respective Last Year’s Quarter

Source FICCI Survey

Capacity Addition & Utilization

The existing average capacity utilization for Q4 2021-22 in manufacturing is 77%, a little higher than 75% in the previous quarter, which reflects increased economic activity in the sector. The future investment outlook also improved as compared to previous quarters but remains that of cautious optimism, as 40% respondents reported plans for capacity additions in the next six months, by 14% on an average.

Global economic uncertainty caused by the Russia-Ukraine Warand increasing cases of COVID worldwide have accentuated the volatilities impacting the major economiesHigh raw material prices, increased cost of finance, cumbersome regulations and clearances, shortage of working capital, high logistics cost due to rising fuel prices and blocked shipping lanes, low domestic and global demand, excess capacities due to high volume of cheap imports into India, unstable market, high power tariff, shortage of skilled labor, highly volatile prices of certain metals etc. and other supply chain disruptions are some of the major constraints which are affecting expansion plans of the respondents.

The table below, gives average capacity utilization in Q4 2021-22 for various sub-sectors of manufacturing.

Table: Current Average Capacity Utilization Levels as Reported in Survey (%)

SectorAverage Capacity Utilization in Q-4 2021-22
Capital Goods75
Chemicals, Fertilizers & Pharmaceuticals70
Electronics & Electricals
Metals & Metal Products75
Paper Products95


80% of the respondents expect either more or same level of inventory in Q-1 April-June 2022-23, which is a bit lower as compared to the previous quarter, where around 90% respondents expected either more or same level of inventory.


The outlook for exports seems to be positive as 53.4% of the respondents expect an average increase of 15.2% in exports in Q-1 2022-23 as compared to the first quarter of last year.

Interest Rate

Average interest rate paid by the manufacturers has increased to 9.69% p.a. as against 8.4% p.a. during last quarter and the highest rate at which loan has been raised is 16% p.a. High lending rates were reported by around 70% of the respondents.

Sectoral Growth

Based on expectations in different sectors, almost all sectors are likely to register moderate to strong growth in Q-1 2022-23 except few as given in the table below.

Table: Growth expectations for Q-1 2022-23 compared with Q-1 2021-22

SectorGrowth Expectation
Capital GoodsStrong
Chemicals, Fertilizers & PharmaceuticalsModerate
Machine ToolsStrong
Metals & Metal ProductsModerate
Paper ProductsModerate

Note: Strong > 10%; 5% < Moderate < 10%; Low < 5%

Source: FICCI Survey

Production Cost

The cost of production as a percentage of sales for manufacturers in the survey has risen for 91% respondents in Q-4 2021-22. Reduced availability and high raw material prices especially that of steel, increased transportation, logistics and freight cost, and rise in the prices of crude oil and fuel have been the main contributors to increasing cost of production. Other factors responsible for escalating production costs include enhanced labor costs, high cost of carrying inventory, and fluctuation in the foreign exchange rate.

Workforce Availability

Most sectors have sufficient labor force engaged in their operations and are not facing shortage of labor at factories. While 77% of our respondents mentioned that they do not have any issues with workforce availability, the remaining 23% feel that there is lack of skilled workforce available in their sector.