High raw material prices, weak demand, shortage of labor remain major causes for concern for the manufacturing sector: Ficci

The going has been tough for India’s manufacturing sector in the wake of the spread of the Covid 19 pandemic.

The latest quarterly survey conducted by industry body Ficci revealed that only 10 per cent of the respondents indicated that they expected higher output in the first quarter of the current financial year while about 90 per cent expected their production level to remain the same or drop in the first three months of 2020-21. For most sectors, high raw material prices, high cost of finance, uncertainty of demand, shortage of skilled labor and working capital, high logistics cost, low domestic and global demand due to imposition of lockdown across all countries to contain spread of coronavirus, excess capacities due to high volume of cheap imports into India, lack of financial assistance were among the main constraints.

Besides, unstable market and complex procedures for obtaining environmental clearances were also causes for concern. The survey was based on responses from 300 manufacturing units in both large and SME segments with a combined annual turnover of over Rs 2.5 lakh crore.

The survey revealed that post relaxations in lockdown conditions, only 35 per cent of total operations have been taking place in factories.

Hiring outlook for the manufacturing sector also showed a bleak picture as 85 per cent of the respondents indicated that they were not likely to recruit additional workforce in the next three months. “This presents a worrisome situation in the hiring scenario as compared to the previous quarter Q-4 of 2019-20, where 78 per cent of the respondents were not in favor of hiring additional workforce,” the Ficci survey said..