Key Details
FICCI’s 71st Quarterly Survey on Manufacturing captures responses from large and small and medium-sized manufacturers across nine sectors. Their combined annual turnover exceeds ₹2 lakh crore. The percentages below describe survey respondents, not growth rates for manufacturing as a whole.
Indicator | Q1 FY27 | Q2 FY27 |
|---|---|---|
Reported or expected higher or unchanged production | 77% | Approximately 95% |
Reported higher or unchanged orders | 77% | 90% |
Average capacity utilisation | 72% | Approximately 75.5% |
Expected to hire in the next three months | 35% | 43% |
Reported higher production costs as a share of sales | 79% | 83% |
Around 80% reported exports that were higher than or unchanged from the comparable quarter a year earlier, up from 74% in the previous survey. Most respondents—90%—said bank funding for working or long-term capital was sufficient.
Output and Orders Recover Together
The sharp rise in firms reporting higher or unchanged production is matched by an improvement in orders. Alongside capacity utilisation rising to about 75.5%, this points to a stronger operating quarter after the disruption that FICCI associates with the West Asian crisis. The survey measures manufacturers’ reported conditions and expectations; it is not an estimate that factory output grew by 95%.
Firms Plan More Hiring, but Capacity Expansion Remains Cautious
The share intending to add workers rose to 43%. Yet one in three respondents reported difficulty finding skilled workers, and the outlook for new investment over the next six months remained steady rather than accelerating. Firms cited geopolitical and trade uncertainty, raw-material availability, logistics costs and regulatory challenges among the obstacles to expanding capacity.
The sector picture is uneven. Respondents expected strong growth in automotive and auto components, strong-to-moderate growth in machine tools and metals, and moderate growth across several other sectors. These are survey expectations, not measured sectoral growth rates.
Higher Costs Accompany the Recovery
Despite stronger activity, 83% reported an increase in production costs relative to sales, compared with 79% in Q1. FICCI cites raw materials, energy, currency depreciation, logistics and utilities. The average interest rate paid by respondents also edged up from 8.9% to 9.1%, even as most said bank finance was available.
Policy Relevance
The survey’s most useful signal is the combination of stronger orders and higher capacity use: manufacturers appear to be making greater use of existing facilities, while remaining cautious about adding new ones. For industrial policy, that distinction matters more than a general statement that sentiment has improved.
Two constraints deserve separate attention. Skill shortages affect firms preparing to hire; cost and trade uncertaintyaffect the case for expanding capacity. The next surveys can show whether improved orders persist long enough to change investment plans—and whether cost pressures ease as activity strengthens.
Follow the Full Survey Update Here: FICCI, Manufacturing Sentiment Rebounds in Q2