'Sluggish manufacturing growth a serious concern'

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SME Times News Bureau | 13 Sep, 2011
Decline in industrial growth in July, particularly the 2.3 percent growth in the manufacturing sector, which is the lowest growth in the last 21 months is a serious concern for the industry, said industry body FICCI on Monday.

Reacting to theIndex of industrial production data for July, FICCI Secretary General Rajiv Kumar said, "The situation is indeed serious as both manufacturing and mining sectors' growth has dipped significantly vis-à-vis last year and unless corrective policy actions are taken we may enter the negative territory soon"

India's factory output grew at a sluggish 3.3 percent in July compared to a year earlier, much slower than expectations and sharply below the 8.8 percent growth registered in the previous month.

Manufacturing, which has a majority share in the index, grew at a slow 2.3 percent in the month under review, while that the mining sector saw output rise by 2.8 percent.

FICCI’s latest quarterly manufacturing survey which was released on Saturday has predicted moderation in manufacturing sector’s growth for July-September 2011.

Continuation of negative growth in sectors like chemicals, textiles, apparels etc is a cause for concern and the situation demands that the Government should now provide relief to the industry by lowering the interest cost burden, said FICCI.

"There is a need to undertake some bold measures by improving the industrial climate and business environment, stimulating investments, ensuring adequate feedstock linkages and development of industry relevant skills" said Kumar.

The draft National Manufacturing Policy which aims to make industry globally competitive by bringing down the compliance burden needs to be announced immediately to boost investors’ confidence, said FICCI.