Skip to main content

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

By Our Representative
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.
69% manufacturers reported a higher cost of production, as against 60% earlier, primarily due to rise in minimum wages and raw material cost
“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

TRENDING

Noam Chomsky, top scholars ask NRIs to take stand on human rights violations in India

Counterview Desk
Renowned world scholars, including Noam Chomsky, James Petras, Angela Davis, Fredric Jameson, Bruno Latour, Ilan Pappe, Judith Butler, among others, have issued a statement castigating the Narendra Modi government for allegedly creating an environment of fear through arrests, intimidation and violence.

Actionable programme for 2019 polls amidst lynch mobs, caste violence, hate mongering

Counterview Desk
Reclaiming the Republic, a civil rights network, has released a document prepared under the chairmanship of Justice AP Shah (retired) -- and backed, among others, by Supreme Court advocate Prashant Bhushan, bureaucrat-turned-human rights activist Harsh Mander, economist Prabhat Patnaik, Right to transparency activist Anjali Bhardwaj and social scientist Yogendra Yadav  (click HERE for full list) -- with the "aim" of putting forth policy and legislative reforms needed to “protect” and “strengthen” the Constitutional safeguards for India’s democratic polity.

India under Modi "promoted" crony business, protected financial fraudsters, fueled bigotry

By Sandeep* and Rahul Pandey**
Narendra Modi's ascension to power was accompanied with jubilation and expectation. His supporters were expecting an end to era of corruption and initiation of good governance which was described as Achche Din. His party's adherence to idea of nationalism was believed to make India a vibrant country and guide India to be a world leader. He gave the slogan of 'Sabka Saath, Sabka Vikas' conveying that his government was for all.
Corruption The government system is infested with corruption. A minimum of 10% is siphoned off from government schemes and projects, some of which goes back to political party in power and remaining is pocketed by various administrative, executive and political functionaries. This corruption continues and has increased. Now an additional Rashtriya Swayamsewak Sangh (RSS) person working as Official on Special Duty or some equivalent position in every government department also has a share in this booty.
The Narendra M…

Inviting Rajapaksa to India "insult" to 1,40,000 Tamils killed by Sri Lankan army

Counterview Desk
In the context of Sri Lankan opposition leader Mahinda Rajapaksa being invited in India, about 75 human rights activists*, claiming to be concerned about rights violations during the civil war in Sri Lanka, especially in 2009, have joined together to express their dissent through a statement.

Modi wants Pak govt be held responsible for JeM terror strike: World doesn't agree

By Sandeep Pandey*
I went to participate in a candle light homage paying event at Dr BR Ambedkar's statue organised by about 200 Dalit students on Hazratganj main crossing in Lucknow on February 16, 2019 evening, two days after the dastardly terrorist act in Pulwana, Jammu and Kashmir (J&K), in which 44 Central Reserve Police Force (CRPF) personnel was killed.

Post-advisory, Govt of India appears reluctant to ban e-cigarettes, "harmful" to kids

By Rajiv Shah
Is the Government of India dilly-dallying over the issue of banning e-cigarettes, which have been declared by anti-tobacco activists across the world as providing “an entryway to nicotine addiction”, especially among the kids? It would seem so, if the latest developments are any guide.

A Godse legacy? BJP rulers have "refrained" from calling Gandhi Father of the Nation

By Dr Hari Desai*
What an agony! On one hand, the entire India is celebrating the 150th birth anniversary of Mahatma Gandhi under the leadership of Prime Minister Narendra Modi, but on the other side, so-called Hindu Mahasabha members have been found mock-enacting the killing of the Mahatma and celebrating the murder by distributing sweets!

No aadhaar, no ration? Hard blow by Gujarat govt on poor and marginalized

By Pankti Jog*
Only those who have aadhaar registration and linked it with ration card will get ration from a Public Distribution System (PDS) shop. This decision of the Gujarat government has hit very badly thousands of poor and marginalized communities of Gujarat, especially during the drought year.

Not just Indian women engineers, men too face sexual harassment at workplace: US study

By Rajiv Shah
A recent research, carried out jointly by two US-based non-profit organizations, Society of Women Engineers (SWE) and Center for WorkLife Law (WLL), based at the University of California, Hastings College of the Law, has found that 45% of women engineers as against 28% of men engineers complained that it was perceived as “inappropriate when women argued at work, even when it was work-related.”

Anti-liquor march: Women padyatris "resolve" to occupy Karnataka state assembly

By Abhay, Swarna Bhat*
At a huge public convention held at Siddaganga Mutt on the Republic Day, January 26, 2019, in the presence of Sanehalli Sri Panditaradhya Swamiji, padyatris of the Madya Nishedha Andolana decided to intensify the ongoing liquor ban movement. A resolution passed at the convention, in which thousands of rural women joined in, the marching women declared that on reaching Bengaluru will “occupy Vidhan Soudha” on Mahatma Gandhi’s martyrdom day, January 30.