Manufacturing sector may grow modestly in Jan-Mar: FICCI

India's manufacturing sector is projected to show a modest growth rate during January-March quarter of 2011-12 on the back of higher book orders and a better export outlook, according to a survey.

Industry body FICCI, in its latest quarterly survey, said 36 percent of the 336 manufacturing units and associations who participated in it expect growth in manufacturing to revive in the last quarter. The survey "projects a revival in the growth of the manufacturing sector in the fourth quarter of 2011-12 after the sector's growth almost bottomed out in the third quarter. However, the growth is expected to be modest". "The revival is a result of higher orders on the books and a somewhat better export outlook," it said. Output of the manufacturing sector, which constitutes over 75 percent of the index of industrial production (IIP), rose 8.5 percent in January, compared to 8.1 percent in the same month last year. About 58 percent respondents said rising cost of raw materials was a major constraint for growth in the sector. It said there is an improvement in demand conditions for the manufacturing sector in the last quarter as compared to the previous quarters. "Growth of manufacturing exports was expected to be better in Q4 as against previous quarter," it said. About 44 percent participants said their capacity utilisation during the period under review was higher than last year. Compared to previous quarters, this time 30 percent reported that they are planning to increase their workforce in the next three months. Further the survey pointed out that seven out of twelve sectors were likely to witness low (less than 5 percent) growth and four sectors strong growth (greater than 10 percent) in Q4. The sectors which are likely to witness low growth are chemicals, cement, steel, textiles, paper and electronics, it said. Sectors such as automotive, leather and tyres are likely to witness growth in excess of 10 percent in the fourth quarter, the survey said.