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High growth expectations for Q-4 from textile, leather and chemical

New Delhi, Feb 11 (KNN) There will be marginal improvement in the outlook for manufacturing sector in the third quarter of 2013-14, according to a survey which also said that upturn in industrial sector is particularly evident in sectors like leather, textiles and chemicals.

According to the survey, the sectors like leather and textiles are expected to have a strong growth of over 10 per cent in January-March 2013-14.

FICCI’s latest Quarterly Survey on Manufacturing for the fourth quarter of 2013-14, indicates marginal improvement in the outlook for manufacturing sector when compared to the third quarter of 2013-14.

However, the growth is expected to be subdued and as per the assessment of other parameters in the survey it is too early to term it as any recovery in the sector, noted FICCI.

The survey showed that 56 per cent of respondents expect higher level of production in the fourth quarter year-on-year against 52 per cent in the third quarter and 48 per cent in the second quarter. This was the highest proportion of respondents exhibiting confidence on improved production year-on-year in the last eight quarters, the survey showed. 

The survey noted that slight improvement is perceived in production outlook for Q-4 due to further improvement expected on the export front and any sustainability of growth will depend a lot on domestic factors. Domestic factors continue to be a major cause of concern for manufacturing as per the survey.

Upturn in industrial sector is particularly evident in sectors like leather, textiles and chemicals. At the same time, sectors like automotive, capital goods and electronics are expected to witness sluggish growth in the current quarter.

There seems to be some improvement in labour intensive sectors like textiles, footwear and leather in Q-4 which is a welcome trend, the survey added.

Export outlook for manufacturing remains positive and seems to have improved somewhat in the fourth quarter as the proportion of respondents expecting higher exports improved to 58 per cent as compared to 48 per cent in previous quarter (q-3). 

Over 70 per cent of the respondents are not likely to hire additional work force in next three months. Though this proportion is less than that of the previous quarter (75 per cent), overall the manufacturing units are not expected to add significantly to their existing work force in coming months.

The demand condition seems to be unchanged with 44 per cent respondents reporting higher order books for January-March quarter in 2013-14, which was the same in the previous quarter as well.  

Investment is projected to remain subdued in manufacturing sector as 71 per cent respondents in the fourth quarter said they do not have any plans for capacity additions for the next six months against 72 percent in the third quarter.

Interest rates paid by the manufacturers range from 8 to 16 per cent as per the survey with average interest rate at around 11 per cent per annum. As many as 72 per cent respondents are availing credit at over 11 per cent, as RBI continued with its hawkish stance. 

Manufacturing was officially estimated to shrink 0.2 per cent in 2013-14 against 1.1 per cent growth in 2012-13. Before this, value of output of factory production contracted 2.4 per cent in 1991-92.

FICCI's latest quarterly survey gauges the expectations of manufacturers for 14 fourteen major sectors. Responses have been drawn from 330 manufacturing units and associations from both large and SME segments with a combined annual turnover of over Rs 5 lakh crore.