Key Details
The 70th Quarterly Survey on Manufacturing, covering eight manufacturing sectors with a combined annual turnover exceeding ₹4 lakh crore, tracks business expectations on production, demand, exports, hiring, costs, financing and capacity utilisation for Q1 FY2026–27.
Indicator | Survey Finding | What It Indicates |
|---|---|---|
Production Outlook | 77% expect production to increase or remain unchanged (down from 93%) | Manufacturing sentiment has moderated |
Demand Outlook | 77% report higher or unchanged orders (down from 89%) | New order expectations have softened |
Capacity Utilisation | Stable at around 72% | Existing industrial capacity continues to be utilised consistently |
Exports | 74% report higher or unchanged exports (up from 61%) | External demand remains relatively resilient |
Hiring Plans | 35% plan additional hiring (down from 41%) | Firms are becoming more cautious about workforce expansion |
Production Costs | 79% report higher costs | Cost pressures remain widespread |
Finance | Borrowing cost stable at 8.9%; 89% report adequate bank finance | Financing conditions remain broadly supportive |
Summary
Business Confidence Softens Amid Geopolitical Risks
The 70th edition of FICCI’s Quarterly Survey on Manufacturing suggests that geopolitical uncertainty arising from the West Asia crisis has made manufacturers more cautious about near-term business conditions. Compared with the previous quarter, fewer firms expect production and new orders to improve, indicating that business confidence has weakened even though industrial activity has not yet slowed sharply.
Industrial Fundamentals Continue to Hold Up
Despite softer sentiment, the survey points to stable underlying manufacturing conditions. Capacity utilisation remained unchanged at around 72%, suggesting that factories continue to operate at similar levels as the previous quarter. Firms also reported continued access to bank finance, with average borrowing costs remaining broadly stable at 8.9%, reducing the risk of an immediate investment slowdown.
Exports Provide an Important Source of Resilience
One of the survey’s more encouraging findings is the improvement in export performance. Nearly three-fourths of respondents reported that exports had either increased or remained stable compared with the same quarter last year, a noticeable improvement over the previous survey. This suggests that export diversification and sustained external demand are helping cushion manufacturers against geopolitical uncertainty.
Costs Remain the Principal Challenge
While financing conditions remain favourable, production costs continue to weigh on manufacturers. Nearly 79% of respondents reported higher costs relative to sales, driven by raw material prices, energy costs, logistics expenses, utilities and currency depreciation. Firms have also become more cautious about recruitment, with planned hiring declining from the previous quarter, indicating that cost pressures are beginning to influence business decisions.
What is Capacity Utilisation?
Capacity utilisation measures the extent to which firms are using their available production capacity. Higher utilisation generally indicates stronger industrial demand and may encourage businesses to invest in expanding capacity, while persistently low utilisation often signals weaker demand and excess production capacity.
Policy Relevance
Suggests that business sentiment is responding more quickly than actual industrial activity, making confidence indicators an important early signal of changing manufacturing conditions.
Highlights the growing importance of supply-chain resilience and input-cost management as geopolitical shocks increasingly influence manufacturing performance.
Indicates that export diversification is helping offset weaker domestic business expectations, strengthening the role of external markets in sustaining industrial growth.
Reinforces the need to monitor capacity utilisation, investment intentions and hiring together, as these provide a more complete picture of manufacturing momentum than production data alone.
Shows that persistent cost pressures, rather than financing constraints, remain the principal challenge for manufacturing competitiveness.
Underlines the importance of maintaining stable trade, logistics and energy policies to support industrial resilience during periods of global uncertainty.
Follow the Full Release Here: Manufacturing Growth Expected to Moderate in Q-1 Due to effects of West Asia Crisis: FICCI Survey