India Inc divided over prospects of manufacturing

The worst may be over for India’s manufacturing sector, a Ficci survey has said but rival industry body CII has demonstrated a cause of concern as its performance review reported increase in the number of sectors showing negative growth in April-June 2008. In a CII survey tracking the performance of various manufacturing sectors, those reporting negative growth increased from 13.86 per cent in April-June 2007 to 21 per cent in the same months of the current year. The percentage has also gone down for areas reporting ‘excellent’ and ‘moderate’ growth. While the areas recording excellent growth dipped from 23.76 per cent to 7 per cent in the period under review, those with moderate growth went down from 35.64 per cent to 32 per cent.

The Ficci survey on the other hand sounded optimistic and projected an improved 9.5 per cent growth for the manufacturing sector in 2008-09 on the back of increased investment leading to substantial capacity addition. “The worst may be over for India’s manufacturing sector. The overall manufacturing growth rate is projected to rise to 9.5 per cent in 2008-09, after declining to 8.8 per cent in the 2007-08 from a high of 12.3 per cent in the previous year,” Ficci said.

The manufacturing sector has been putting up a poor performance, with a high interest regime taking a toll on the growth of the sector. It grew by a meagre 3.9 per cent in May 2008, as compared to 11.3 per cent in the year-ago period. Manufacturing has a weight of over 79 per cent in the overall Index of Industrial Production. Of the 100 sectors surveyed by Ficci, as many as 67 are poised to achieve ‘excellent’ to ‘high’ growth rates ranging 10-20 per cent or more.

Groups such as speciality chemicals, earth moving and construction equipment, industrial valves, printing machinery, frost free refrigerators, micro wave ovens and skin care and cosmetics are expected to lead the charge, it added.

13.86 to 21 pc The increase in percentage of sectors showing negative growth, as per a CII survey

67 pcThe sectors poised to achieve ‘excellent’ to ‘high’ growth rates, as per a Ficci report