Manufacturing Sentiment Rises In Q2 FY27, 95% Report Stable Or Higher Output: FICCI

New Delhi: Indian manufacturing sentiment strengthened in the second quarter of FY27 as businesses reported better production trends, stronger order books and improving export prospects, according to FICCI’s assessment.About 95% of surveyed manufacturers recorded higher or unchanged production, compared with 77% in the preceding quarter. The improvement suggests confidence in domestic business conditions despite geopolitical uncertainty.Indian Businesses Face China Visa Hurdles As Stricter Approvals Disrupt Manufacturing Operations Stronger Demand and Capacity UtilisationDemand indicators also improved, with 90% of respondents reporting higher or stable order books, up from 77% in Q1 FY27. Capacity utilisation increased to around 75% from 72%, reflecting greater use of manufacturing facilities.However, the investment outlook for the next six months remained broadly stable. Businesses identified geopolitical tensions, tariffs, trade restrictions and uncertain demand as obstacles to expansion. Skill shortages, raw material availability, logistics expenses and regulatory challenges added to their concerns.Exports and Hiring Outlook StrengthenExport performance showed improvement, with 80% of respondents reporting higher or unchanged exports compared with the corresponding period last year. This compares with 74% in the previous survey. FICCI linked the gains partly to export diversification initiatives undertaken by industry and government.Hiring intentions strengthened alongside business expectations. Around 43% of manufacturers planned to add workers over the next three months, compared with 35% previously.Automotive and auto components had the strongest growth outlook. Machine tools and metal products were expected to register strong-to-moderate growth, while capital goods, chemicals, glass, electronics, electrical equipment and textiles faced moderate growth prospects.GST Council May Expand Export Refund Rules On October 7, Over 38,000 Exporters Could Get Liquidity Boost Rising Production Costs Remain a ChallengeCost pressures persisted despite improving sentiment. Nearly 83% of respondents reported increased production costs as a proportion of sales, against 79% in the preceding quarter.Access to finance remained comfortable, with 90% reporting adequate bank funding. However, the average borrowing rate increased to 9.1% from 8.9%, adding to operating pressures.The survey highlights improving manufacturing activity, although expansion plans remain sensitive to costs and external uncertainties.