Manufacturing sentiment in India rebounded sharply in Q2 FY27, with 95% of surveyed firms reporting higher or unchanged production, up from 77% in Q1, according to the FICCI Quarterly Survey on Manufacturing released on 6 October 2026.
FICCI said the findings reflect a rebound in production sentiment compared to the previous quarter, indicating signs of recovery from the West Asia crisis. The industry body attributed the improvement to "the overall positive sentiments and stable domestic fundamentals for manufacturing growth."
Demand also strengthened during the quarter, with 90% of respondents reporting higher or unchanged order levels, up from 77% in Q1 FY27. Average capacity utilisation rose to around 75% from 72% in the previous quarter.
43% of respondents said they are looking to hire an additional workforce in the next three months, compared with 35% in the last quarter. Labour availability remained relatively manageable for most manufacturers, with around 67% reporting no workforce availability issues, though the remaining 33% reported a shortage of skilled workers and called for greater efforts from both industry and government.
About 80% of manufacturers reported overseas shipments at or above year-ago levels, up from 74% in Q1. FICCI noted that "export diversification efforts by the government and industry seem to be yielding results."
Despite the improvement in production and demand, manufacturers continued to face elevated cost pressures. Nearly 83% of respondents reported an increase in production costs as a percentage of sales, against 79% in the previous quarter. FICCI attributed the increase to higher raw material and energy costs, currency depreciation, and increased logistics and utility expenses.
The survey covered around 225 firms across nine major sectors, including automotive and auto components, capital goods, chemicals and allied products, electronics and electricals, glass, machine tools, metal and metal products, textiles and miscellaneous manufacturing. Respondents came from both large companies and SME segments with a combined annual turnover of over ₹2 lakh crore.
Source : FICCI press release
