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Manufacturing sector to slow down: Surveys

business Updated: Sep 11, 2011 13:43 IST

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Rising input and interest costs will slow the manufacturing sector's growth in the coming quarters of fiscal 2011-12, leading industry lobbies said on Sunday.

A survey conducted on 324 manufacturing units by the Federation of Indian Chambers of Commerce and Industry (FICCI) showed an overall slowdown in the business sentiment of the manufacturing sector in the second quarter.

"Over 74% of total respondents reported that they expect growth to moderate in their sector in the second quarter of 2011-12 as compared to the second quarter of the prior year," the survey said.

Areas such as investments, capacity utilization and employment have shown a declining trend, the survey stated.

High interest rates have affected demand as well, it said.

"A significant fall in the order books is seen in the second quarter," it added.

A separate survey by the Confederation of Indian Industry(CII) seconded FICCI's study.

"The government needs to speed up the reform agenda in order to get the manufacturing sector back on track. Unveiling the National Manufacturing Policy at the earliest would be a step in the right direction," said CII Director General Chandrajit Banerjee.

The policy is expected to create 100 million jobs in the next decade.

CII's survey, conducted on 3,500 companies engaged in various manufacturing activities, revealed a decline in a number of sectors.

Only 10.5% of the companies, which participated in the CII survey, said that their sectors were growing at more than 20%.

Last year, 35.7% of the respondents had said that their sectoral growth rate was 20%.

"The survey is a forward looking indicator and it shows deceleration in growth in a large number of industrial sectors in the first half of 2011-12," said Banerjee.