Amidst rising input costs, manufacturing growth remains positive: FICCI Manufacturing Survey

The survey, based on responses from both large and MSME manufacturers, reflects sustained optimism driven by strong domestic fundamentals. Compared to Q3 FY 2025–26—when 91% of respondents reported higher or stable production—around 93% indicated similar or improved production levels in Q4.

This optimism is also visible in demand trends, with 89% of respondents expecting higher or steady domestic orders in Q4 compared to the previous quarter.

Broad-Based Sectoral Assessment

The 69th edition of the survey evaluated performance across eight major sectors, including automotive and auto components, capital goods, chemicals, fertilizers and pharmaceuticals, electronics and electricals, machine tools, metals and metal products, and textiles and apparel.

The findings are based on inputs from manufacturing units across large and SME segments, with a combined annual turnover exceeding ₹8 lakh crore.

Capacity Utilisation & Investment Outlook

Capacity utilisation saw a marginal dip compared to the previous quarter, with average utilisation levels hovering around 72%. Despite this, the investment outlook remains stable over the next six months.

Key challenges to capacity expansion include geopolitical uncertainties (tariffs and trade restrictions), along with operational constraints such as labour availability, raw material shortages, and regulatory hurdles.

Inventory Trends

Inventory levels remain stable. While 89% of respondents reported higher or unchanged inventory levels in Q3, around 86% expect similar trends to continue in Q4.

Export Outlook

Export sentiment has improved, with nearly 80% of respondents expecting exports to remain stable or grow in Q4 FY 2025–26, up from 74% in the previous quarter.

Hiring Trends

Hiring sentiment has strengthened slightly, with 41% of respondents planning to expand their workforce over the next three months, compared to 38% in the previous quarter.

Interest Rates & Credit Availability

The average interest rate paid by manufacturers stands at 8.85%. Encouragingly, over 86% of respondents reported adequate access to funds from banks for both working capital and long-term needs.

Rising Production Costs

Cost pressures remain a concern. Around 70% of respondents reported an increase in production costs as a percentage of sales, up from 57% in the previous quarter.

This rise is primarily attributed to higher raw material prices, currency depreciation, and increased logistics, power, and utility costs.

Workforce Availability

While most sectors are not facing significant labour shortages—with 79% reporting adequate workforce availability—about 21% highlighted a shortage of skilled labour, underscoring the need for enhanced efforts by both government and industry.