Slack in private sector investment: 74% India's manufacturers say they have no plans for capacity addition

By Jag Jivan*
The Federation of Indian Chambers of Commerce and Industry (FICCI), in its latest quarterly survey on expectations of manufacturers for the period April-June 2017, has said that “future investment outlook remains less optimistic”, with “74% respondents reporting that they don’t have any plans for capacity additions for the next six months.” Observers consider this as lingering impact of demonetization, effected by Prime Minister Narendra Modi in November 2016.
Pointing out that this just about a one per percent improvement over the earlier quarter, January-March 2017, FICCI, in its “Manufacturing Survey Report – July 2017” says “Although, the bleak investment outlook seems to be waning”, if one takes into account that in October-December 2017, which was the demonetization phase, “77% respondents had no plans for capacity addition”, things are clearly not on the upswing.
“High percentage implies slack in the private sector investments in manufacturing is there to continue for some more months”, says India’s premier industry body, adding, “Large volumes of imports, under-utilised capacities and lower domestic demand from industrial sectors are some of the major constraints which are affecting the expansion plans.”
“On a broader perspective”, the report says, “In some sectors (like chemicals, capital goods, textiles machinery, cement, metals and paper) average capacity utilization has either remained same or declined.” The only sectors which are experiencing a rise in the average capacity utilisation are “auto, textiles and electronics and electrical”, it adds.

The survey further says that the cost of production as a percentage of sales for product for manufacturers in the survey has risen significantly as 69% respondents during the period April-June 2017, against 60% respondents reported cost escalation in the previous quarter. “This is primarily due to rise in minimum wages and raw material cost”, it claims.

“About two-thirds of the respondents expect slightly higher production levels in the April-June 2017 (when asked for an annual comparison). This also gets reflected in the order books as similar proportion of industry participants reported higher orders for the same quarter (on a sequential basis)”, the survey says.
According to the survey, while about 67% of the respondents reportedly plan to add capacity in the next six months to the tune of about 15%, it underlines, “The expansion plans may get affected by a few delays largely due to the lag period involved in getting plant and machinery, which usually extends to about 20 weeks.”
The survey says, “Almost all of the respondents expect exports to get impacted (fall of 0-5%) due to the recent currency appreciation, while imports to get cheaper by 5-10%.”
“Close to 50% of the industry representatives expect the growth of manufacturing sector to remain same, while a few expect the growth to revive in near future”, the survey says, adding, “For a little over 50% of the respondents, cost of production as a percentage of their sales increased vis-à-vis last year”, mainly due to “inflationary pressures on raw material costs and increase in labour wages.”

---

*Freelance writer

Comments

'Tax the top': Nationwide protests demand action as 1% control 40% of India’s wealth

By A Representative Civil rights groups across the country observed the martyrdom day of Bhagat Singh on March 23, as people from diverse backgrounds united to raise their voices against growing economic inequality. The mobilisations marked the launch of a nationwide campaign against inequality, running from March 23 to April 14 (Ambedkar Jayanti), under the banner of the “Tax The Top” campaign.

Fair prices, fresh produce: Vegetable market opens in Rajasthan tribal village

By Vikas Meshram* On 18 March 2026, the tribal village of Sajjangarh in southern Rajasthan witnessed the grand and dignified inauguration of a new vegetable market (mandi). Established through the tireless joint efforts of the Krushi Avam Adivasi Swaraj Sangathan (Bhilkuaan) and Vaagdhara, under the active leadership of the Gram Panchayat of Sajjangarh, the market is being hailed as a cornerstone for local self-governance, self-reliance, and a sustainable rural economy.

When democracy becomes a performance: The Tibetan exile experience

By Tseten Lhundup* I was born in Bylakuppe, one of the largest Tibetan settlements in southern India. From childhood, I grew up in simple barracks, along muddy roads, and in fields with limited resources. Over the years, I have watched our democratic system slowly erode. Observing the recent budget session of the 17th Tibetan Parliament-in-Exile, these “democratic procedures” appear grand and orderly on the surface, yet in reality they amount to little more than empty formalities. The parliamentarians seem largely disconnected from the everyday struggles faced by ordinary exiled Tibetans like us.

Study links sanctions to 500,000 deaths annually leading to rise in global backlash

By Bharat Dogra International opinion is increasingly turning against the expanding burden of sanctions imposed on a growing number of countries. These measures are contributing to humanitarian crises, intensifying domestic discord, and heightening international tensions, thereby increasing the risks of conflicts and wars.

Ex-IAS Atanu Chakraborty and a tale of two different Gujarat vision documents

By Rajiv Shah The likely appointment of Atanu Chakraborty as HDFC Bank chairman interested me for several reasons, but above all because I have interacted with him closely during my more than 14 year stint in Gandhinagar for the “Times of India”. One of the few decent Gujarat cadre bureaucrats, Chakraborty, belonging to the 1985 IAS batch, at least till I covered Sachivalaya was surely above controversies. He loved to remain faceless, never desired publicity, was professional to the core, and never indulged in loose talk. When he neared retirement, which happened in April 2020, first there were rumours in Sachivalaya that he would be appointed SEBI chairman, and then there was talk he would be chairman (or was it CEO?) of Gujarat International Finance Tec (GIFT) City (a dream project of Narendra Modi as Gujarat chief minister, which as Prime Minister Modi wants to promote, come what may). But, for some strange reasons, and I don’t know why, none of this happened, despite the fact...

Witnessing Iran beyond propaganda: Truth, war, and the path beyond western paradigm

By Naile Manjarrés On June 23, 2025—marked as the 2nd of Tir, 1404, on the Persian calendar—a ceasefire between Iran and Israel was announced. This "night of the decree" shifted the trajectory of global affairs; although the world may appear unchanged on the surface, we have yet to fully grasp its impact.

Environmental expert urges policy overhaul as forest and water resources face critical decline

By A Representative On the occasion of World Forest Day and World Water Day , observed on March 21 and 22, environmental voices from the Western Ghats have issued a stark warning to the Union government, calling for an urgent paradigm shift in how India manages its interconnected natural resources. In a formal communication addressed to Union Minister for Jal Shakti , Sri C R Patil , and Union Minister for Forest, Environment and Climate Change , Sri Bhupendra Yadav , policy analyst Shankar Sharma has highlighted a growing disconnect between sectoral policies and the holistic reality of resource governance.

Gujarat cadre to HDFC: When bureaucratic style hits corporate walls

By Rajiv Shah I was a little amused by the abrupt March 17, 2026 resignation of Atanu Chakraborty —a Gujarat cadre IAS officer of the 1985 batch who retired from the government in 2020—as chairman of HDFC Bank . Much of what may have led to his decision to quit this ostensibly high post—actually a non-executive, part-time role—is by now well known. I followed most of it online with considerable interest, partly because I had interacted with him umpteen times during my stint as The Times of India correspondent in Gandhinagar from 1997 to 2012.

Weaponised bravery, institutionalised cowardice as the engine of authoritarianism

By Bhabani Shankar Nayak* The insidious politics of crony capitalism is accelerating at an unprecedented pace, aided by the reckless expansion of artificial intelligence and other technologies designed not to liberate but to dominate, domesticate, and dehumanise societies. Alongside this, an illiberal politics of cowardice is emerging—serving as an accomplice to dehumanisation amid growing imperialist wars and conflicts across the world. Death in distant lands no longer stirs conscience. The push-button culture of digital screens has transformed social media into a disconnected, individualised, Hobbesian space, where the puritan pursuit of self-interest is elevated as the essence of human existence.

Search This Blog