Industry body FICCI said manufacturing and economic activity picked up in the September quarter and the outlook has improved significantly. However, doing business has become costly due to less capacity utilization, transportation charges, increased logistics expenses.
The outlook for the July-September quarter has improved significantly.
There has been a marked improvement in the manufacturing activities outlook in the second quarter of the current financial year. However, the cost of doing business and production has increased during this period. This has been concluded in a survey by industry body FICCI (FICCI). According to FICCI’s latest quarterly survey on manufacturing, industry people say that the cost of production has increased due to higher fixed costs, higher overheads to ensure safety protocols. At the same time, there has been a huge drop in production due to the lockdown.
The survey said that overall costs have also increased due to lower capacity utilization, increase in freight charges and other logistics expenses, increase in raw material, power cost and higher interest rates. The survey said that after a sluggish first quarter (April-June), there has been a significant improvement in the outlook for the second July-September quarter. However, most of the people surveyed say that their business and cost of production are increasing.
On the export front, the survey said that the outlook has improved. 58 percent of the participants said that their exports are expected to improve in the second quarter. At the same time, 68 percent said that they would not appoint additional employees during the next three months. The survey includes the opinion of representatives of more than 300 manufacturing units of large and SME sector. The combined annual turnover of these units is more than Rs 2.7 lakh crore.