New Delhi: India’s manufacturing sector continued its strong growth momentum in the third quarter of FY26, with industry performance reaching a record high and overall sentiment showing a marked improvement, according to a new report.
The latest Quarterly Survey on Manufacturing (QSM) released by the Federation of Indian Chambers of Commerce and Industry (FICCI) revealed that 91 per cent of participating firms reported higher or stable production levels during Q3 FY26. This reflects a four-percentage-point increase from the 87 per cent recorded in the previous quarter, indicating sustained expansion and rising optimism across the sector.
Industrial confidence also strengthened, with 86 per cent of respondents expecting higher or unchanged order books compared to the previous quarter. The survey noted that expectations improved further following the recent announcement of GST rate cuts.
The findings are based on responses from manufacturing units with a combined annual turnover of more than Rs 3 lakh crore, underscoring the broad-based nature of the growth.
Financial conditions supported the sector’s performance, with the average interest rate for manufacturers at 8.9 per cent. Nearly 87 per cent of respondents reported adequate access to bank financing for both working capital and long-term investment needs.
Sector-wise, electronics and electricals, along with miscellaneous industries, are projected to register strong growth, while auto components, capital goods, and textiles are expected to maintain a steady and moderate expansion. Despite global economic uncertainties, 38 per cent of manufacturers indicated plans to increase hiring over the next three months, up from 35 per cent in the corresponding period last year.
Capacity utilisation remained robust at close to 75 per cent, signalling sustained economic activity within the manufacturing ecosystem.
However, cost pressures persist. About 57 per cent of survey participants reported high or rising production costs as a share of sales, driven by increased raw material prices, currency depreciation, and higher logistics, power, and utility expenses.
While nearly 80 per cent of respondents said labour availability was adequate, around 20 per cent highlighted a shortage of skilled workers, stressing the need for stronger skilling initiatives by both government and industry.
Separately, another recent report projected that India could emerge as a global industrial powerhouse by 2047, with the manufacturing sector’s contribution to GDP expected to rise from around 17 per cent to approximately 25 per cent.
With inputs from IANS