India's manufacturing sector remained on a steady growth path in the fourth quarter of FY 2025-26, supported by strong domestic demand and a stable export outlook, according to a survey by the Federation of Indian Chambers of Commerce and Industry (FICCI).

The survey said about 93 per cent of respondents reported higher or unchanged production in Q4, up from 91 per cent in the previous quarter, indicating continued growth momentum across sectors.

Domestic demand remained firm, with 89 per cent of respondents expecting higher or similar orders compared to the previous quarter.

However, rising costs continued to weigh on manufacturers. Nearly 70 per cent of respondents reported an increase in production costs as a share of sales, compared to 57 per cent in the previous quarter, driven by higher raw material prices, currency depreciation, and increased logistics, power, and utility expenses.

However, capacity utilisation saw a marginal dip, with overall manufacturing utilisation levels at around 72 per cent in Q4 FY26.

Among key sectors, utilisation stood at about 76.4 per cent in textiles, apparels and technical textiles, 76 per cent in metal and metal products, 75.7 per cent in automotive and auto components, and 75 per cent in chemicals, fertilisers and pharmaceuticals, while capital goods (69 per cent), electronics and electricals (68 per cent), machine tools (70 per cent), and miscellaneous segments (65 per cent) reported relatively lower utilisation levels.

Companies also highlighted challenges in expanding capacity, citing global uncertainties, trade restrictions, labour availability issues, raw material shortages, and regulatory hurdles.

On the export front, sentiment remained stable, with around 80 per cent of respondents expecting exports to be higher or unchanged compared to the same period last year, up from 74 per cent in Q3. The hiring outlook improved, with 41 per cent of firms planning to add workforce over the next three months, compared to 38 per cent in the previous quarter.

Access to finance remained adequate, with over 86 per cent of respondents reporting sufficient availability of funds from banks.

The average interest rate paid by manufacturers stood at 8.85 per cent. Overall, the survey indicated that despite persistent cost pressures and a slight moderation in capacity utilisation, strong domestic demand, steady exports, and improved hiring intentions continue to support growth in India's manufacturing sector.

Published on May 6, 2026