India's manufacturing sector on road to recovery

India’s manufacturing sector is showing firm indications of revival and was on a higher growth trajectory in the first half (H1) of the current financial year (2009-10), according to a Confederation of Indian Industry (CII) survey.

The survey compared results for April-September 2009 with April-September 2008. It showed that growth rates in the majority of sectors had positive trends in the first half of 2009-10, compared with the corresponding period in 2008-09.

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There is also a significant shift in the trends, from the negative and moderate growth category to the high and excellent growth one, as 12 per cent of the sectors registered such a shift in H1 2009-10 compared with all of 2008-09.

"This improvement in manufacturing growth has been a result of the stimulus packages announced by the government," said Chandrajit Banerji, director-general, CII.

The buoyant manufacturing growth in the first half is led by a rise in production of basic goods, intermediate goods and consumer durables.

Around 10 per cent of the sectors surveyed registered an excellent growth rate (above 20 per cent) in H1 2009-10, compared with only seven per cent of the sectors in the corresponding period last year. The share of the sectors registering moderate growth declined to 35.8 per cent in H1 this year against 42.6 per cent last year.

Also, the second quarter had witnessed substantial decline in the share of sectors recording a negative growth rate, to 19.4 per cent from 40 per cent in the first quarter of the current year. Sectors showing a greater growth rate increased to 35.5 per cent of the total in July–September 2009 against 22.7 per cent in April-June 2009.

Sectors registering an excellent growth rate of above 20 per cent include nitrogen gas, phosphate, motor starters, industrial gasses, and construction equipment. A high 10-20 per cent growth rate was registered by pumps, light commercial vehicles, cars, scooters and other consumer durables like electronics and home appliances.

On the export side, the situation is still one of concern. Twenty of 29 sectors have reported negative growth rates in the first half of 2009-10. With the exception of soda ash, machine tools, cars, multipurpose vehicles and biscuits, all other sectors reported negative and moderate growth rates.

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