FICCI Quarterly Survey on Manufacturing (QSM): Manufacturing Index Reaches All Time High In Q3 2025-26
SDG 8: Decent Work and Economic Growth | SDG 9: Industry, Innovation and Infrastructure
Ministry of Commerce and Industry | Ministry of Finance
The 68th edition of the FICCI Quarterly Survey on Manufacturing (QSM) reveals that industrial optimism has hit an all-time high for the October-December 2025-26 period. The survey, which draws responses from units with a combined turnover of over 3 lakh crore, indicates that 91% of manufacturers reported higher or stable production levels.
Demand and Market Drivers
Domestic demand remains the primary driver of this growth, supported by favorable fiscal changes.
Order Volumes: 86% of respondents anticipate higher or stable orders, a sentiment bolstered by recent GST rate cuts.
Export Growth: More than 70% of respondents expect their exports to rise or remain steady compared to the previous year.
Sectoral Performance: Growth is expected to be Strong in Electronics & Electricals, while sectors like Capital Goods and Chemicals show Moderate growth.
Capacity Utilization and Investment
While production is peaking, the utilization of existing facilities remains a key metric for future expansion.
Utilization Levels: The average capacity utilization stands at 75%, with Metal & Metal Products leading at 79%.
Expansion Hurdles: Despite a steady investment outlook for the next six months, manufacturers cited geopolitical tariffs, labor availability, and raw material shortages as primary constraints.
Inventory Trends: Approximately 83% of units expect to maintain higher or stable inventory levels to meet the rising demand.
Labor and Financial Health
The survey highlights a positive trend in the formal job market and stable access to credit.
Hiring Intent: 38% of respondents are looking to hire additional workforce in the next three months, up from 35% in the previous year.
Credit Access: 87% of manufacturers reported sufficient fund availability from banks, despite an average interest rate of 8.9%.
What is Capacity Utilization in the manufacturing context? Capacity Utilization is a metric used to measure the extent to which a nation or an enterprise actually uses its installed productive capacity. It is the relationship between the actual output produced with the installed equipment and the potential maximum output that could be produced if capacity was fully used.
Policy Relevance
The record-high index indicates that recent fiscal interventions, such as GST rationalization, are effectively stimulating industrial output. This data serves as a critical pulse for monetary policy and regulatory planning.
Fiscal Efficacy: The correlation between GST cuts and order volumes confirms that tax rationalization is a successful lever for stimulating demand.
Employment Stability: The rise in hiring intent to 38% suggests that the manufacturing sector is ready to absorb more formal labor, provided skill gaps are addressed.
Incentivizing CAPEX: With utilization at 75%, policy focus should shift toward the Production Linked Incentive (PLI) schemes to push units toward the 80-85% threshold, which typically triggers new private investment.
Follow the full news here: Manufacturing Index Reaches All Time High in Q-3 2025-26: FICCI Survey