Manufacturing sector showing stronger signs of recovery due to stimulus: CII

New Delhi, Nov 22 : India's manufacturing sector witnessed an increased rate of recovery in the second quarter this fiscal, primarily helped by government stimulus even as exports continued to decline, says a survey conducted by an industrial lobby.

Over 48 percent of manufacturing firms across 100 sectors that participated in the survey conducted by the Confederation of Indian Industry (CII) said business recovery was faster during July-September.

In the first quarter, only 32 percent of the firms surveyed had said they were witnessing signs of recovery, CII said.

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

Among the firms surveyed, 13 percent said business grew by more than 20 percent, 35 percent logged growth levels between 10-20 percent, while a little over 32 percent saw moderate rates of increase -- from flat to 10 percent growth.

In the first quarter, only 9.33 percent said business grew 20 percent, 23 percent saw an increase of between 10-20 percent, while 28 percent said growth was moderate.

Another encouraging trend in the second quarter was that only 19 percent of firms saw a decline compared to 40 percent in the previous quarter.

"Ten of the 100 sectors reported more than 20 percent growth rates. Some of these are nitrogen gas, phosphate, motor starters, industrial gasses, earth moving and construction equipment and multi purpose vehicles," said the report.

"Twenty-six sectors have recorded high growth of 10-20 percent in April-September 2009, while 37 sectors have registered moderate growth of 0-10 percent," it added.

Among sectors which still recorded a dip in business were caustic soda, cold-rolled steel strips, polymers, sponge iron, switch gears, ball and roller bearings, fluid power, electric motors, machine tools, power transformers, textile machinery, medium and heavy commercial vehicles, tea and edible oils.

Sales in the July-September quarter also improved compared to the previous period in sectors such as cement, ceramics, tractors and consumer durables.

Manufacturers of three-wheelers, cars, light commercial vehicles, two-wheelers and utility vehicles also saw sales growing.

The report attributed the reduced demand to the slowdown, infrastructural bottlenecks, high interest rates, credit availability, currency fluctuations and cheap imports from China.

However, the exports situation still remained worrisome for the manufacturing sector.