Manufacturing to slow down in April-June quarter: survey

Manufacturing growth is likely to slow down to 11 per cent during April-June compared to an estimated 15 per cent expansion in the previous quarter, due to rising raw material prices, a FICCI survey said on Monday.

Chemicals and allied products, which have a significant share in the overall manufacturing sector, are likely to pull down the growth in the first quarter of the current fiscal, the trade body said.

"While manufacturing is expected to witness over 15 per cent growth in the quarter January-March 2010, the growth is likely to be in the range of 11-12 per cent in April-June 2010," it said.

The survey was based on responses from 468 manufacturing firms and associations from sectors like FMCG, textiles, leather, metals, capital goods, automotive, cement, tyres, machine tools, electronics, consumer durables, ship building, forging, chemicals and miscellaneous industries.

Over 80 per cent of the 468 respondents in the FICCI survey said the sharp increase in raw material prices like cement, textiles, leather, metal, tyres and capital goods will impact the growth in the short term. Besides rising raw material prices, scarcity of power and labour laws would be factors that may hamper the sector's growth, it said.

Also, about 50 per cent of the respondents expect exports to be lower or same in April-June 2010 quarter over the same period last year.

However, sectors that would contribute significantly to the manufacturing growth in April-June are automotive, FMCG, electronics and consumer durables, metals and forging.

In a separate survey, another trade body, the Confederation of Indian Industry (CII), too said that rising cost of raw material, infrastructural bottlenecks, higher interest rates, inadequate availability of credit and cheap Chinese imports are some of the major concerns for the growth of the manufacturing sector. (See: FICCI quarterly survey on Indian manufacturing sector)