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Home arrow News arrow Business News arrow Manufacturing registers higher cumulative growth in April-March 2010-11: Survey
Manufacturing registers higher cumulative growth in April-March 2010-11: Survey Print E-mail
Tuesday, 29 March 2011
New Delhi: The overall performance of industry showed improvement during April-March 2010-11 compared to the previous year, although there are variations in the performance across sectors, according to the latest CII ASCON survey.

"Inspite of high inflation and rising input cost, a vast majority of industry sectors are set to record higher growth in financial year 2010-11 than in the previous year," said Chandrajit Banerjee, Director General, CII.

Out of 121 sectors covered by the CII ASCON survey, 41 sectors (33.8%) showed excellent growth rate of more than 20% in April-March 2010-11 compared to 34 sectors (28.0%) in April-March 2009-10 which shows a marked improvement.

Sectors reporting excellent growth rates are Air conditioners (29.4%), Tractors (25%), Fertilizer (37.2%), Capacitors (LT & HT) (20.6%), Ball and roller bearings (33%), Earth moving and construction equipment (30%), Vehicle industry (28.2%), Tyre Industry (24%), Textile Machinery (25.0 %), Machine Tools (51.0%), Nuclear Electricity (39.9%) etc.

Some of the sectors recording high growth are Utility vehicles (17.6%), Motor starters (18.0%), Natural gas (14.4%), Crude oil (11.9%), Transmission line Towers (12.3%), Power Transformer (11.9%), Motors LT (12.2%), Energy meters (19.6%), Home and Personal care (12.0%), Automation industry (10.5%), Alcoholic Beverages (13.5%), Biscuit (19.5) etc .

The sectors registering high growth rate have decreased from 30 (24.7%) in April-March 2009-10 to 26 sectors (21.4%) in April-March 2010-11. This is because more sectors have shifted to the excellent growth segment.

The CII ASCON survey also estimated the performance of sales and exports of manufacturing industries. Out of 30 sectors reporting for sales, 18 sectors are estimated to report excellent growth, 4 to report high growth while 8 sectors are estimated to report moderate growth. Out of 25 sectors reporting exports, 18 are reported to be in the excellent growth category, 1 in high growth category, 4 in the moderate growth category while 2 fall in the negative growth category.

The survey also highlights some of the general and sector specific issues faced by the industry. The general issues constraining the performance of industry include: Lack of proper Infrastructure in the areas of Power, Transport and Water, shortage of skilled labour, poor availability of finance especially micro finance, delays in environmental clearances, no proper government policy in case of land. The recent increase in the price of coal for captive power plants has increased costs for many manufacturing sectors.

The survey also revealed that multiple agencies in decision making, absence of sector specific interactions, lack of structured response and two way communications between government and industry are also constraining factors for industry.

The sector specific issues pertain to: Indiscriminate import of second hand and cheap old technology textile machinery, no incentives by government for exporting caustic soda and soda ash to other countries, unfair competition from spurious products pertaining to ball & roller bearing, High rate of Vat @12.5% for the biscuit industry, shortage and high prices of HR Coils, the basic input for the production of Cold Rolled products, inconsistency in the supply of Natural gas both in terms of quality and quantity is seriously affecting sponge iron production, problems due to inverted duty structure on rubber latex is a major concern for tyre industry.

These issues need to be addressed by the government at the earliest for industry to maintain its high growth momentum. According to Mr. Chandrajit Banerjee, Director General, CII “Many sectors are coming under pressure due to the rising cost of raw materials and fuel. Rising interest costs will put further pressure on their margins in the coming year. To allow industry to expand capacities, the government should pursue the reform agenda which includes several forward looking steps including streamlining land acquisition and faster environment clearance for various projects.”

The share of the sectors registering negative growth rate has declined significantly to 4.1% (5) in April-March 2010-11 from 20.6% (25) in the corresponding period of the previous year which is a clear sign of improvement. However, the number of sectors in the moderate growth category of 0-10% has increased from 19.0% to 40.4% during the same period, indicating that despite the overall improvement some sectors are still facing difficulties. The sector-wise break-up shows that many of these sectors are in the basic and intermediate goods categories.

Sectors registering moderate growth of 0-10% in April-March 2010-11 include Caustic soda (4.9%), Soda Ash (9.0%), Cement (4.4%), Refinery (2.4%), Steel (7.8%), Rubber goods (6.5 %), Ceramics (3.0%), and Bus and truck tyre (6.0%).

Motors (HT) (-1.5 %), Tea (-2.7%), Asbestos Cement (-6.1%), Edible oils like Sunflower oil (-12.0%), Rape/Mustard (-0.5%) are in the negative zone.

Last Updated ( Tuesday, 29 March 2011 )
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