A survey conducted by the Confederation of Indian Industry reveals that the country’s manufacturing sector is likely to maintain the growth trajectory in the second and third quarters of 2010-11  The country’s manufacturing sector that has been going great guns is expected to remain robust and maintain the growth trajectory in the second and third quarters of 2010-11 (July-September and October-December) as well, states a latest survey conducted by the Confederation of Indian Industry (CII). Total 110 sectors were covered in the survey, which included participation from various manufacturing associations.According to Chandrajit Banerjee, director general of CII, “Although a hike in policy rates by the Reserve Bank of India (RBI) did impact the industry’s growth trajectory, industry players expect growth momentum to remain strong in the second and third quarters of the current financial year.” It is to be noted that in July RBI raised repo rates by 25 basis points (bps) to 5.75%, while the reverse repo rate was hiked by 50 bps to 4.50%.
Domestic demand to facilitate growth
Analysts believe that increase in domestic demand for products such as automobiles, consumer durables etc will play an instrumental role in facilitating the growth of the sector. The CII survey also revealed that industry players are looking forward to the implementation of the Goods and Service Tax (GST) at the earliest, which will help manufacturers to get rid of multiple taxation and get access to seamless credit across the country’s supply chain.
CII’s survey has come just after a recent survey conducted by KPGM International, which also revealed that Indian manufacturers would maintain a positive outlook in the coming months. Now that the auction for 3G licences are over with the services slated to be launched on a large-scale by the year end, the same will require infrastructure setup and equipment, which will subsequently boost business for 3G equipment manufacturers.
According to Richard Rekhy, head of advisory, KPMG India, “Productivity and quality of Indian products are improving with large number of domestic manufacturers rolling out products, which are at par with their foreign counterparts.” Moreover, with the upcoming festive season, when consumer demand hits its peak, the country’s manufacturing sector is expected to touch new heights.
Arup Choudhury
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