The FICCI Manufacturing Survey reflects cautious sentiment for production in the quarter ended June (Q1FY27) compared to the previous quarter, indicating the potential impact of the West Asia crisis, the industry body stated.
Responses were based on expectations of the manufacturers, reflecting the overall positive sentiments and stable domestic fundamentals for manufacturing growth.
In comparison to Q4FY26, when 93 percent of respondents reported higher or same production levels, approximately 77 percent respondents reported either higher or same production levels in Q1FY27, the latest edition of the quarterly survey said.
This moderation was also evident in demand, as 77 percent of respondents reported higher or the same orders in the first quarter of FY27 as compared to 89 percent in the previous quarter.
However, there was no major impact seen on the capacity utilisation as compared to the previous quarter. The existing average capacity utilisation in manufacturing stood at close to 72 percent, which is similar to the capacity utilisation in the previous survey.
“The future investment outlook is steady for the next six months. Challenges faced by respondents in expanding capacities include the current geopolitical situation (tariffs, trade restrictions, demand uncertainty), operational issues (labour availability, raw material shortages, increasing logistic costs, regulatory challenges),” FICCI said. About 61 percent of respondents reported a higher or the same level of exports in Q4 of FY 2025-26, whereas for Q1 of FY 2026-27 around 74 percent of the respondents reported their exports to be higher or the same as compared to the same periods in the preceding fiscal.
Export diversification efforts by the government and industry seem to be yielding results, FICCI said.
Nearly 79 percent of respondents reported an increase in the cost of production as a percentage of sales, as against 70 percent in the previous quarter, indicating that cost pressures were higher in this quarter.
The increase in the cost of production compared to last year is mainly due to higher raw material costs, energy costs, currency depreciation, and increased logistics and utility costs.
FICCI’s latest Quarterly Survey on Manufacturing (QSM), which is the 70th edition of the survey, assessed the performance and sentiments for the April-June period of FY 2026-27 of manufacturers for eight major sectors such as Automotive & Auto Components, Capital Goods, Chemicals, Fertilisers & Pharmaceuticals, Electronics & Electricals, Machine Tools, Metal & Metal Products, Textiles and Apparels & Technical Textiles.
Responses have been drawn from manufacturing units from both large and SME segments with a combined annual turnover of over Rs 4 lakh crore.