India’s manufacturing sector continues to demonstrate remarkable resilience, maintaining a positive growth trajectory in the final quarter of FY26. According to the latest survey released by the Federation of Indian Chambers of Commerce and Industry (FICCI), sentiment remains optimistic among manufacturers despite the dual challenges of rising input costs and global geopolitical uncertainties.
The survey, which covered over 250 manufacturing units across eight major sectors—including automobiles, electronics, and pharmaceuticals—revealed that 93% of respondents reported either higher or stable production levels in Q4. This marks a slight increase from the 91% recorded in the previous quarter. Domestic demand also remains a strong driver of this optimism, with nearly 89% of manufacturers anticipating a steady flow of new orders.
However, the path to growth is not without obstacles. The survey highlighted a significant surge in production costs, with 70% of respondents reporting an increase in costs as a percentage of sales, up from 57% in Q3. This spike is primarily attributed to expensive raw materials, currency depreciation, and rising logistics and utility expenses. Consequently, average capacity utilization saw a minor dip, settling at approximately 72%.
Despite these financial headwinds, the outlook for future investment remains steady. More than half of the manufacturers surveyed revealed plans to expand their production capacities within the next six months. While expansion is a priority, businesses noted that trade restrictions, labor availability, and regulatory hurdles remain persistent constraints. Notably, 60% of manufacturers still expect high growth and have called for increased government support through R&D grants, technology partnerships, and export incentives.
Workforce availability appears stable for the majority, with 79% of factories reporting no issues with labor supply. However, the remaining 21% flagged a critical shortage of skilled manpower, urging both industry and government to accelerate vocational training initiatives. As the fiscal year closes, the FICCI report underscores a sector that is increasingly confident, even as it navigates a complex and high-cost global environment.
