India’s employment outlook remains bleak as the manufacturing sector, one of the country’s largest employers, shows little sign of a quick recovery from the pandemic shock. According to the FICCI Quarterly Survey on the Indian Manufacturing Sector for the April–June 2020 quarter, a vast majority of companies are not planning to expand their workforce in the near term.
The survey revealed that 85% of manufacturing firms do not expect to hire additional workers in the next three months, up from 78% in the previous quarter (Q4 of 2019–20). The report highlights the severe stress in the sector, with only 10% of respondents reporting higher production during Q1 of 2020–21, compared with 15% in the previous quarter.
Overall, 90% of respondents either expected lower or stagnant production during the April–June 2020 quarter, against 85% in January–March 2020. The average capacity utilisation across the industry fell sharply to 61.5% in Q4 2019–20, down from 76% in Q3 2019–20. The only exceptions were medical devices and metals and metal products, where capacity use remained stable.
The subdued outlook is also reflected in investment intentions. Only 22% of respondents indicated plans for capacity additions over the next six months, compared with 28% in the previous quarter.
High raw material costs, expensive financing, shortage of skilled labour, weak demand both domestic and global, and rising logistics costs — compounded by the nationwide lockdown to contain COVID-19 — were cited as the biggest hurdles to expansion.
The survey, based on responses from over 300 large and SME manufacturing units with a combined annual turnover of over ₹2.5 lakh crore, also highlighted that firms across sectors such as automotives, textile machinery, and leather and footwear are now looking for alternative sources of raw materials to reduce dependence on existing supply chains.
In terms of operational levels, firms reported running at 28% to 63% of capacity, with workforce deployment ranging from 33% to 57%, depending on the sector. Order books too have been hit hard, with 85% of respondents in Q1 2020–21 expecting fewer orders compared with 54% in Q1 2019–20.
The findings reflect the severe strain on the manufacturing sector, which continues to battle sluggish demand and multiple structural challenges, dampening hopes of a quick employment revival.
