Investment Dynamics Remain Optimistic
Surveys say that 42% of producers have either planned to invest in their factory to enhance their capacity or extend it for the next six months—the same level of optimism as reported in the previous quarter. This stable investment optimism is sustained by government initiatives such as the production-linked incentive schemes, infrastructure development, and policy reforms to enable ease of doing business.
Sectoral Trends and Order Books
Confidence in manufacturing continues to strengthen due to increasing orders. Consequently, 83% of manufacturers are hoping for rising orders in Q3 FY 2025. The survey covered eight major industries: Automotive & Auto Components, Capital Goods, Chemicals, Pharmaceuticals, and Electronics. Machine Tools, Metals, and Textiles. Automotive is expected to demonstrate buoyant to moderate growth due to an emerging robust EV presence and increasing focus on sustainability. However, machine tools and metals would continue to expand at a slow pace owing to supply chain bottlenecks and cost pressures.
Issues and Challenges
On the upside, the sector still faces several challenges:
- Rising Raw Material Costs: Increasing prices for iron, steel, rubber, and chemicals are contributing to increased production costs.
- High Interest Rates: Increased interest rates are troubling the financial situations of relatively many producers due to the associated high funds that need to be borrowed.
- Bottlenecks of regulation: Lengthy approvals and compliance add to the operational burden.
- Labor shortages: The potential for employment has not changed, but the lack of skilled workers has not ceased.
- High land and infrastructure costs: Not only may land pricing be a bottleneck to large-scale expansion, but there’s also fierce competition with overseas locations.
Exports and Employment Outlook
Going forward, over 70% of respondents expect greater exports in Q3 FY 2025 as compared to the previous year, post a 65% increase in exports in Q2 FY 2025. Thirty-five percent of manufacturers are keen on employing new labor in the next three months, sending some positive signals toward specific industries in creating jobs. However, the industry does face a challenge as regards skilled labor. Eighty percent of manufacturers report that skilled personnel or trained people are available; however, the remaining twenty percent mention there is an urgency for skills use—particularly coming from new fronts, such as electronics, AI-driven manufacturing, and advanced automation.
Staff Writer
Staff Writer at Manufacturing Industry
What’s Next
While India hopes to shape itself into a global manufacturing powerhouse, the industry will face myriad opportunities and challenges. It is very important to address key blocks such as high costs, skill shortages, and regulatory complexities for sustaining this momentum. The government, through initiatives that provide policy support in collaboration with the industry, will be the primary definer of India’s future manufacturing ecosystem. A proper quantum of interventions and this sector stands to become an integral instrument in the growth of the nation economically, job creation, besides influencing global trade.
While India’s manufacturing sector is improving, it shall continue to grow as long as it can address the issues it faces. With a credible partnership by the government and industry stakeholders, the session will deliver the process under which the sector flourishes in India and competes vigorously in the world marketplace.