By Satyaki Chakraborty
FICCI’s latest manufacturing survey continues to reflect sustained growth and increasing optimism for India’s manufacturing sector. For the third quarter of 2025-26, the index has touched all-time high with 91 per cent of respondents reported either higher or same production levels as compared to 87 per cent for Q2 FY 2025-26. This optimism is also evident in domestic demand, as 86 per cent of respondents anticipated higher or same orders in Q3 FY 2026 compared to the previous quarter and more so after the latest GST rate cuts announced.
FICCI’s latest Quarterly Survey on Manufacturing (QSM), which is the 68th edition of the survey, assessed the performance and sentiments for Q3 October-December 2025-26 of manufacturers for eight major sectors namely, Auto Components, Capital Goods, Chemicals, Fertilizers & Pharmaceuticals, Electronics & Electricals, Machine Tools, Metal & Metal Products, Textiles, Apparels & Technical Textiles and Miscellaneous. Responses have been drawn from manufacturing units from both large and SME segments with a combined annual turnover of over Rs. 3 lakh crores.
According to the survey, the existing average capacity utilization in manufacturing is close to 75 per cent, which reflects sustained economic activity in the sector. The future investment outlook is steady for investments and expansions in the next six months. Challenges faced by respondents in expanding capacities include global and geopolitical factors (tariffs, trade restrictions, economic uncertainty), operational issues (labour availability, raw material shortages, regulatory challenges).
In Q2 2025-26, around 90 per cent of the respondents reported higher or same level of inventory and for Q-3 2025-26, around 83 per cent of the respondents are expecting higher or same level of inventory.
In exports, about 69 per cent of respondents reported higher or same level of exports in Q2 FY 2025-26 and in Q3 2025-26 more than 70 per cent of the respondents expect their exports to be higher or same as compared to previous year’s similar quarters. 38 per cent of the respondents are looking at hiring an additional workforce in the next three months as compared to 35 per cent in the same quarter last year.
The average interest rate paid by the manufacturers has been reported to be 8.9 per cent. A little over 87 per cent of respondents reported sufficient availability of funds from banks for working capital or long-term capital.
Production costs for manufacturers in this quarter seem to remain on higher side. Nearly 57 per cent of respondents reported an increase in the cost of production as a percentage of sales, which is consistent with the previous quarter’s findings, indicating that costs are still on the higher side. The increase in cost of production compared to last year is mainly due to higher raw material costs, currency depreciation, and increased logistics, power, and utility costs.
Most sectors though are not facing shortage of labour at factories as around 80 per cent respondents mentioned that they do not have any issues with workforce availability, the remaining 20 per cent feel that there is still lack of skilled workforce available in their sector and there is a need to step up efforts both at government and Industry level. (IPA Service)
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