Manufacturing sector growth is decelerating due to higher cost of raw materials and credit: Survey

NEW DELHI: Manufacturing sector growth is decelerating due to higher cost of raw materials and credit, an assessment survey shows. Only 10% of sectors reported growth of above 20%, or excellent growth, in the April-September period this year, against 35.7% in the year-ago period, a CII-ASCON survey based on feedback from 3,500 manufacturing related companies showed.

Negative growth was recorded in 25.6% of sectors, compared with 8.7% in 2010.

"The government needs to speed up the reform agenda in order to get the manufacturing sector back on track. Unveiling the National Manufacturing Policy at the earliest would be a step in the right direction," said CII Director-General Chandrajit Banerjee.

The survey, which covered 86 sectors, highlighted some general and sector-specific issues faced by the industry. These include rise in raw material cost, high cost of credit, infrastructure bottlenecks, land acquisition issues, rising oil prices, sale of spurious products, environmental and procedural delays, etc. Moderate growth was recorded in the basic goods, intermediate goods and consumer non-durables categories.

The basic goods category was the worst performer with negative growth in the cement, natural gas and aluminum sectors. Excellent growth was recorded in three-wheelers (21.3%), tyres for LCVs (20%), two-wheeler tyres (26%), ball and roller bearing (23.3%), power cables (20.5%), tractors (28.7%), and earth moving and construction equipment (20%).