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

The Federation of Indian Chambers of Commerce and Industry (FICCI), in its 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.”

Comments

A conman, a demolition man: How 'prominent' scribes are defending Pritish Nandy

How to defend Pritish Nandy? That’s the big question some of his so-called fans seem to ponder, especially amidst sharp criticism of his alleged insensitivity during his journalistic career. One such incident involved the theft and publication of the birth certificate of Masaba Gupta, daughter of actor Neena Gupta, in the Illustrated Weekly of India, which Nandy was editing at the time. He reportedly did this to uncover the identity of Masaba’s father.

Whither Jeffrey Sachs-supported research project which 'created' Gujarat model of development for Modi?

Even as Donald Trump was swearing-in as US President, a friend forwarded to me a YouTube video in which veteran world renowned economist Prof Jeffrey Sachs participated and sought an answer as to why Israeli Prime Minister Benjamin Netanyahu was "afraid to fly" despite being invited to Donald Trump's swearing in ceremony. This took my memory to 2003, when I -- as representative of the Times of India -- had a short tet-a-tat along with a couple of other reporters with Sachs in the chief minister's office in Gandhinagar.

No to free thought? How Gujarat's private universities are cowing down their students

"Don't protest"—that's the message private universities across Gujarat seem to be conveying to their students. A senior professor told me that students at the university where he teaches are required to sign an undertaking promising not to engage in protests. "They simply sign the undertaking and hand it over to the university authorities," he said.

Busy taking books to the needy, this rationalist exposes miracles in a superstition-infested Gujarat society

I knew his name as a campaigner against the sheer wastage of the large amounts of ghee brought by devotees from across India for a major religious ceremony conducted every year in Rupal village, near Gandhinagar, the Gujarat capital, on the ninth day of Navratri. I had seen him at several places during my visits to different NGO meetings as well as some media conferences.

To be or not to be Sattvik: Different communities' differing notions of purity and fasting

This is a continuation of my last blog on Sattvik food. When talking about Sattvik, there is a tendency to overlook what it may mean to different sections of people around the world. First, let me redefine Sattvik: it means having a "serene, balanced, and harmonious mind or attitude." Derived from the Sanskrit word sattva, it variously means "pure, essence, nature, vital, energy, clean, conscious, strong, courage, true, honest, and wise." How do people achieve this so-called purity? Among Gujarati Hindus, especially those from the so-called upper castes who are vegetarians, one common way is fasting. On fasting days, such as agiyarash —the 11th day of the lunar cycle in the Vedic calendar—my close relatives fast but consume milk, fruit juices, mangoes, grapes, bananas, almonds, pistachios, and potato-based foods, including fried items. Another significant fasting period is adhik maas. During this time, many of my relatives "fast" by eating only a single me...

'Potentially lethal, carcinogenic': Global NGO questions India refusing to ban white asbestos

Associated with the Fight Inequality Alliance, a global movement that began in 2016 to "counter the concentration of power and wealth among a small elite", claiming to have members in the United Kingdom, South Africa, Kenya, Zambia, the Philippines, and Denmark, the advocacy group Confront Power appears all set to intensify its campaign against India as "the world’s largest asbestos importer".

Would Gujarat Governor, govt 'open up' their premises for NGOs? Activists apprehensive

Soon after I uploaded my blog about the Gujarat Governor possibly softening his stance on NGOs—evidenced by allowing a fisherfolk association to address the media at a venue controlled by the Raj Bhawan about India’s alleged failure to repatriate fishermen from Pakistani prisons—one of the media conference organizers called me. He expressed concern that my blog might harm their efforts to secure permission to hold meetings on state premises.

Beyond the Sattvik plate: Prof Anil Gupta's take on food, ethics, and sustainability

I was pleasantly surprised to receive a rather lengthy comment (I don't want to call it a rejoinder) on my blog post about the Sattvik Food Festival, held near the Sola Temple in Ahmedabad late last year. It came from no less a person than Anil Gupta, Professor Emeritus at the Indian Institute of Management-Ahmedabad (IIM-A), under whose guidance this annual event was held.

Shyam Benegal's Mathan a propaganda film that supported 'system'? No way

A few days ago, I watched Manthan, a Shyam Benegal movie released in 1976. If I remember correctly, the first time I saw this movie was with Safdar Hashmi, one of the rare young theater icons who was brutally murdered in January 1989. Back then, having completed an M.A. in English Literature from Delhi University in 1975, we would often move around together.

Search This Blog