The slowdown in India's manufacturing sector will continue for some more months despite the government's stimulus package, according to a survey by the Federation of Indian Chambers of Commerce and Industry (FICCI).
The global economic slowdown has impacted the manufacturing sector in India, with sectors like textiles, metal and metal products, machinery & equipment, leather and chemicals etc planning production cuts ranging from 10 per cent to 50 per cent for the remaining part of the current fiscal ending 31 March 2009, the survey said.
The textile sector is the most affected where exports are expected to halve in the remaining part of the financial year. Textile exporters does not expect the current package is unlikely to give any big stimulus to the sector.
The FICCI survey has suggested higher duty drawback rates and increased interest rate subsidy of up to 4 per cent for the textile industry.
The slowdown in the manufacturing sector has impacted labour-intensive industries like textile, leather, metal etc and an extended slowdown might result in job losses of around 10 to 15 per cent in almost all major sectors of the economy, the survey pointed out.
The FICCI survey shows job losses in the range of 10-30 per cent in leather and leather products industries, metal and metal products, textiles and jewellery in next few months.
The survey attributes this to falling demand in the EU, the US, Japan and other developed countries and a steep increase in raw material prices.
Textile exports are expected to fall 10 per cent in October 2008 while leather exports will see the maximum fall (up to 62 per cent) in overseas orders.
However, sectors like machinery and equipment, chemicals and products may not see any loss of employment in the current scenario because these sectors have not posted a negative growth so far till October.
For October this year, the textile, leather and metal industries are expected to clock decline of 3.9 per cent, 13 per cent and 30 per cent, respectively while chemicals and machinery manufacturing industries are expected to register an increase of 5 and 17 per cent, respectively, according to the survey.
The survey covered about 200 companies, including both large (turnover above Rs30,000 crore) and small and medium enterprises in the textiles, metal and metal products, machinery and equipment, leather and leather goods, chemicals, gems and jewellery and cement industries.
The government and the Reserve Bank of India have announced various measures, including a reduction in lending rates for the export and SME sectors and an across-the-board cut in excise duty for the manufacturing sector.
The government is also planning a Rs20,000 crore stimulus package involving a big boost to infrastructure spending and measures to boost domestic demand