Indian Manufacturing Sentiment Rebounds In Q2 FY27 As Production & Demand Strengthen

Indian manufacturing sentiment strengthened in the second quarter of FY27, with manufacturers reporting improved expectations for production, demand, exports and employment, according to a FICCI report.

The analysis showed that nearly 95 per cent of respondents recorded higher or unchanged production levels in Q2 FY27, sharply up from 77 per cent in the previous quarter.

Demand conditions improved as well, with 90 per cent of manufacturers reporting higher or stable order books, compared with 77 per cent in Q1.

FICCI said the findings point to a recovery in business confidence, supported by stable domestic economic conditions despite persistent geopolitical uncertainty.

Capacity utilisation rose to around 75 per cent from 72 per cent in the previous survey, indicating stronger use of existing manufacturing assets.

The investment outlook for the next six months remained broadly stable, although manufacturers cited geopolitical tensions, tariffs, trade restrictions, uncertain demand, skill shortages, raw material constraints, logistics expenses and regulatory hurdles as key barriers.

Export sentiment improved, with about 80 per cent of respondents reporting higher or unchanged exports from a year earlier, compared with 74 per cent previously.

FICCI attributed part of the improvement to export diversification efforts by the government and industry.

Hiring plans strengthened, with 43 per cent of manufacturers expecting to recruit workers over the next three months, up from 35 per cent.

Automotive and auto components recorded the strongest growth outlook, while machine tools and metal products showed strong-to-moderate prospects.

However, cost pressures persisted. Nearly 83 per cent reported higher production costs as a share of sales. Meanwhile, 90 per cent reported adequate bank funding, although the average interest rate rose to 9.1 per cent from 8.9 per cent.

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