Q3 FY 2025-26 Manufacturing Boom: High Production, Capacity Utilisation, and Hiring Plans

The Indian manufacturing sector has reached a historic milestone, with the industry’s performance index hitting an all-time high in the third quarter of the 2025-26 fiscal year. According to the 68th edition of the FICCI Quarterly Survey on Manufacturing (QSM) released in New Delhi, the sector is experiencing sustained growth and “increasing optimism” across both large-scale industries and small-to-medium enterprises.

Production and Order Outlook Remain Strong

The survey, representing units with a combined annual turnover exceeding ₹3 lakh crores, revealed that 91% of respondents reported higher or stable production levels, a jump from 87% in the previous quarter. This surge in industrial confidence is largely driven by a robust domestic market, with 86% of respondents anticipating higher or same orders in Q3 FY 2026, aided by recent GST rate cuts.

Key sectors showing strong growth include Electronics & Electricals and Miscellaneous. Auto Components, Capital Goods, and Textiles continue on a moderate but steady growth trajectory.

Capacity Utilisation and Employment Plans

The average capacity utilisation in manufacturing stands close to 75%, reflecting sustained economic activity. Despite global headwinds like trade restrictions and geopolitical uncertainty, 38% of manufacturers plan to hire additional workers in the next three months, up from 35% last year, indicating a strengthening job market in the industrial heartland.

Rising Costs and Skill Shortages

Manufacturers continue to face high production costs, with 57% reporting increased costs as a percentage of sales due to higher raw material costs, currency depreciation, and increased logistics, power, and utility expenses. While 80% of the industry reports no immediate labour shortages, 20% warned of a “lack of skilled workforce,” calling for intensified skilling efforts by both government and private players.

Financial Stability and Export Outlook

Financial stability underpins the current boom. Average interest rates for manufacturers are 8.9%, with over 87% reporting sufficient bank funding for working capital and long-term investments. A positive export outlook, with 70% of firms expecting stable or higher international sales, suggests that Indian manufacturing is well-positioned to maintain its record-breaking momentum through the remainder of FY 2025-26.

(This article has been syndicated from ANI)