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Manufacturing Sector Still Buoyant: Cii Survey for Q1

Confederation of Indian Industry (CII) m-Ascon survey for the period April - June 2008 over April - June 2007 was released here today. The survey tracking the performance of the various manufacturing sectors of the industry shows that almost half of the sectors (47%) are in the excellent growth and high growth category, but there is cause for concern as sectors reporting negative growth has increased. The increase in the interest rates following the announcement of the monetary policy yesterday is also likely to impact the overall manufacturing growth.

Out of a total of 100 sectors reporting production, 7 sectors reported excellent growth rate of more than 20% and 40 sectors recorded high growth rate of 10-20 percent. 32 sectors recorded a moderate growth rate of less than 10 percent and 21 sectors recorded negative growth rate. The percentage has gone down for excellent growth and moderate. However there is increase in the sectors in high growth category from 30.7% to 40%. The survey also shows increase in the percentage of sectors in negative category from 16.35% to 21% for the period April to June 2008.

According to the release issued by CII, the present situation gives a mixed picture of signs of slowing down in certain sectors. Industry has to find ways to cope with this difficult situation created by soaring input prices and increasing interest rates. It is important that non-fiscal initiatives by government be taken up at the earliest to keep up the investment pipeline. This is the right time to take initiatives that would de-botteneck the supply side, said the CII release.

According to the survey, LLDPE, PVC, Power Cables and Rubber Footwear are in excellent growth category.

Polymers, Capacitors, Circuit Breakers, Industrial Valves, Power Transformer, Transmission Line Towers, Electrical Fans and industrial gases like Argon, Carbon Dioxide, Hydrogen, Nitrogen, Oxygen are in the high growth category.

While sectors like cement, Motor Starters, Aluminium Extrusions, Machine Tools, Transformer, Ball & roller Bearings, Audio Products, Washing Machines, Clocks, Rubber Conveyor Belting, Automotive Tyre, Groundnut Oil, Sunflower oil and Vehicle Industry including LCVs, Scooters, were all in the moderate growth category. Fertilizer, Distribution Transformer, Textile Machinery, Mopeds, All 3 Wheelers, Electric Two wheelers, Rubber Hoses and Edible Oils reported negative growth.

According to the CII-ASCON survey, out of the 22 sectors reporting sales 1 sector recorded excellent growth, 7 sectors reported high growth, 10 sectors registered moderate growth and 4 sectors registered negative growth.

Utility Vehicles sector reported excellent growth while industrial valves, Transmission Line Towers, Cars, Electric Fans, LCVs, reported high growth. Caustic Soda, Cement, M&HCV's, Mopeds, Motor Cycles and Scooters, were in moderate growth category.

Fertiliser, Textile Machinery and Electric Two Wheelers reported negative growth.

According to the survey, 4 sectors out of 20 sectors reporting exports were in excellent growth category while 2 sectors have shown high growth. 3 sectors were in the moderate growth category.

Mr Chandrajit Banerjee, Director General, CII said "it could be seen that there is increase in percentage of sectors in the high growth from 30.7% to 40%, if compared to the last survey. This is a positive development. It reflects that industry is learning to cope with the difficult situation emerging out of high interest costs and spiralling input prices. However, the emerging situation needs to resolve itself soon since industry has only limited capacity to keep absorbing these cost escalations."

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