Expense of operating stays a concern in India, a study by FICCI has saidNew Delhi: Overall outlook for the nation's manufacturing sector has shown enhancement in the third quarter of the current fiscal, though the cost of operating stays a cause for issue and hiring potential customers remain subdued, according to a study by industry body FICCI.The findings of the most recent quarterly study on manufacturing released on Sunday also reflect sustained economic activity in the sector, with existing average capacity utilisation in the variety of 65 to 70 per cent.The percentage of respondents reporting greater production in the 3rd quarter of 2021-22 (October-December 2021-22) was around 63 per cent, almost double than the year-round period (around 33 percent), noted FICCI.This assessment is also reflective in order books as 61 per cent of the participants in October-December 2021-22 had a higher variety of orders as against July-September 2021-22, the study found.Spiralling raw material costs, high expense of financing, the uncertainty of need, scarcity of working capital, high logistics expense, low domestic and international need due to supply chain interruptions are a few of the significant restrictions that are affecting the expansion strategies of the participants, it said.The study assessed the efficiency and beliefs of manufacturers for the 3rd quarter for 12 major sectors specifically automotive, capital products, cement, chemicals, fertilisers and pharmaceuticals, electronic devices - & electricals and medical gadgets amongst others.Responses have actually been drawn from over 300 producing units from both big and small and medium business sections with a combined yearly turnover of over Rs 2.7 lakh crore.Around half of the participants anticipate an increase in their exports for third quarter of 2021-22 as versus the very same quarter of the previous year.

Hiring outlook for the production sector remains controlled as around 75 percent of the participants pointed out that they are not likely to employ additional labor force in the next 3 months, FICCI mentioned on the survey.However, an average interest rate paid by the manufacturers has decreased slightly to 8.4 per cent per year as against 8.7 per cent throughout last quarter and the highest rate remains as high as 15 percent.

It highlights that cuts in repo rate in the last couple of months by RBI have actually not caused a proportional decrease in the loaning rate as reported by around 60 percent of the respondents.High basic material costs, increased transport and logistics cost, and rise in the prices of diesel, LPG, natural gas, power, and fuel has been the primary contributor to the increasing expense of production.