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Encouraging Each Other

Manufacturing Industry gains pace, reaches 13 months high!

Last year, the country saw a start of a revolution that entirely changed the course of Indian economy for good. The Government of India took a bold step by banning the currency notes of ₹500 and ₹ 1000. However, manufacturing industry saw a dip after its rollout due to lack of cash but started gaining soon in the second quarter of the year 2017. It was speculated that the implementation of GST in July 2017 might again create a trough in the graph but the effect was almost negligible. Instead, manufacturing industry of the country has reached its highest in November 2017 in the past 13 months. According to a private survey after the release of GDP data on 30th November, the economy of the nation is strengthening in the third quarter of the fiscal year 2017.

From 50.3 in October, the Nikkei India Manufacturing Purchasing Managers’ Index rose to 52.6 in the month of November. The major reason behind this improvement is the constant increase in the rate of placement of new orders and high production rates. Moreover, India’s automakers showed a double-digit growth in the recent months thus, concreting the fact that the dip seen in the past few months was just because of the panic and was only incidental and momentary. The GDP was consequently benefitted and showed a rebound with a gradual yet stable improvement from the July-September quarter and reached 6.3%.

The recent reduction in GST rates is an underlying notion that has helped the manufacturer from the disruptions caused in the small-scale industries by its implementation in the month of July. The mid-range and high scale faced a negligible impact and thus, now along with the fresh orders from small-scale industries are paving the way for the manufacturing industries to particulate smoothly and advance on its path. Growth in outputs and new orders has reached its highest since October 2016 because of the constant support.

Rate of growth in new orders!

The data shows a significant growth in rate of new orders that are being placed and have reached its highest mark in the past 13 months. The manufacturing industry was able to take a leap forward in almost all categories except one, i.e. capital goods. However, the acceleration in the outlined production rate has been phenomenal and even the sales number has joined the boat. The purchasing of raw materials and semi-finished items was more on the sonic side in the month of November since the manufacturers have started to buy the materials in a greater quantity. This can be attributed to the factors like increase in demand for consumer and intermediate goods and a positive response by the market that has led to an upturn in the investment activities.

The market has slowly healed itself and is getting back on the road. The export orders have also been pushed beside the green arrows on the charts and shown an improvement after three years. The industry has also expanded itself and the data collected through the surveys are a proof of the fact that the rate of expansion has been the highest since October 2016.

Amidst all these, the Input cost inflation also accelerated to a very high speed in the past three months causing a marginal inflation in the output charge with chemical, steel and petroleum sectors contributing the most to this. A fulfilling growth in November has finally brought a full stop to the critiques of the economists criticizing the government’s decision to rollout two important bills in such quick successions.

With all these going on, the Indian manufacturing industry has finally started gaining on the bumps that were supposedly hampering the industry’s vegetation over the past few months.

Written & Compiled By Faber Kishlay Krishna & Faber Mayuri Pandya

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