Mfg sector growth to slow down further: Study

Top Stories

»	49% Indian startups now from tier 2, 3 cities: Jitendra Singh
»	'India ranks 3rd in global startup ecosystem & number of unicorns'
»	Tripura exported over 9K tonnes of pineapples in 2 years
»	CPI inflation eases to 6.71% in July, IIP falls to 12.3%
»	Rupee depreciates 12 paise to close at 79.64 against US dollar

SME Times News Bureau | 21 Nov, 2011
Growth in the manufacturing sector has moderated during April-September compared to the corresponding period of the previous year and is likely to slow down further during the October-December quarter due to a rise in input cost and uncertainties in global economy, a study said on Sunday.

"The manufacturing sector has observed moderation in growth during April-Sep 2011 compared to the corresponding period of the previous year. The industry expects further moderation in growth in the third quarter -- Oct-Dec 2011," said a Confederation of Indian Industry (CII) Ascon survey.

"The number of sectors recording excellent and high growth is expected to decline and shift to moderate growth category," it added.

Out of 103 sectors covered by the survey, those reporting excellent growth of more than 20 percent declined to 10.6 percent in April-Sep 2011 compared to 35.7 percent in April-Sep 2010.

During April-September 2011, 43.6 percent sectors recorded a moderate growth rate compared to 38.9 percent sectors in the previous period. The percentage of sectors with high growth rate has increased from 16.7 percent in April-September 2010 to 24.2 percent in the same quarter in 2011.

The sectors registering a negative growth rate have increased significantly to 21.3 percent from a low of 8.7 percent, which is a clear sign of decelerating growth.

"High input and capital cost and uncertainties in the global economy are the major factors constraining growth of the manufacturing sector," said Chandrajit Banerjee, director general of CII.

"These issues need to be addressed at the earliest to help industry overcome the ongoing decelerating growth phase," he added.

The survey also indicates a further slowdown in growth with a larger number of sectors falling in the moderate category of growth of 0-10 percent.

Out of 85 sectors covered by the survey for the period Oct-Dec 2011, the percentage of sectors reporting excellent growth of more than 20 percent is expected to decline to seven percent from 10.4 percent in July-Sep 2011 and 20.7 percent in April-June 2011.

The sectoral classification shows that while the categories such as basic goods, intermediate goods, capital goods and consumer non-durables have fewer sectors in the excellent and high growth brackets, consumer durables have a larger share of sectors growing at a high rate.

The worst performing category is intermediate goods that has a maximum number of sectors expected to record negative growth.

The survey said that sectors including earthmoving and construction equipment, tractors, scooter and scooter tyres will have excellent growth during Oct-Dec while vehicle industry, tyre industry, machine tools, alcoholic beverage and biscuits will have high growth.

It added that edible oil, cement, cold rolled steel, nylon synthetic fibre, alkali and passenger cars will have moderate growth followed by a negative growth in textile machinery, fertilizer, natural gas, polyester synthetic fibre, rubber goods and newsprint.