The latest FICCI Manufacturing Survey highlights a notable improvement in production sentiment for Q2 2026-27, with around 95% of manufacturers reporting stable or increased production levels compared to 77% in Q1 FY 2026-27. This surge is attributed to recovery from the West Asian crisis and positive domestic fundamentals. Demand also rose, with 90% of participants noting unchanged or higher orders.

The Quarterly Survey evaluated nine key sectors, including Automotive, Chemicals, and Textiles, and included responses from both large and SME manufacturing units. Current capacity utilization stands at approximately 75%, up from 72% previously, reflecting increased operational efficiency. Additionally, 89% of respondents reported stable inventory levels, though this is slightly down from 91% in Q1.

Export performance improved as well, with 80% of respondents indicating higher or stable exports in Q2. The diversification strategies in exports implemented by the government and industry are showing effectiveness. Moreover, 43% of manufacturers foresee hiring additional workforce in the coming three months, up from 35% last quarter.

Interest rates for manufacturers have increased slightly to 9.1%, although 90% reported adequate access to funds for their capital needs. Despite rising production costs—83% of respondents reported increases due to factors such as raw material prices and logistics—most sectors are not facing labor shortages, with 67% stating no issues. However, 33% identified a lack of skilled labor, necessitating enhanced training efforts by both the government and the industry.