Manufacturing Index Reaches All Time High in Q-3 2025-26: FICCI Survey
NEW DELHI, 20 January 2026: FICCI‘s latest manufacturing survey continues to reflect sustained growth and increasing optimism for India’s manufacturing sector. For the third quarter of 2025-26, the index has touched all-time high with 91% of respondents reported either higher or same production levels as compared to 87% for Q2 FY 2025-26. This optimism is also evident in domestic demand, as 86% of respondents anticipated higher or same orders in Q3 FY 2026 compared to the previous quarter and more so after the latest GST rate cuts announced.
Source: FICCI survey
FICCI’s latest Quarterly Survey on Manufacturing (QSM), which is the 68th edition of the survey, assessed the performance and sentiments for Q3 October-December 2025-26 of manufacturers for eight major sectors namely, Auto Components, Capital Goods, Chemicals, Fertilizers & Pharmaceuticals, Electronics & Electricals, Machine Tools, Metal & Metal Products, Textiles, Apparels & Technical Textiles and Miscellaneous. Responses have been drawn from manufacturing units from both large and SME segments with a combined annual turnover of over Rs. 3 lakh crores.
Capacity Addition & Utilization
- The existing average capacity utilization in manufacturing is close to 75%, which reflects sustained economic activity in the sector.
- The future investment outlook is steady for investments and expansions in the next six months.
- Challenges faced by respondents in expanding capacities include global and geopolitical factors (tariffs, trade restrictions, economic uncertainty), operational issues (labour availability, raw material shortages, regulatory challenges).
- The table below gives average capacity utilization for various sub-sectors of manufacturing:
Table: Current Average Capacity Utilization levels as reported in survey (%)
| Sector | Average capacity utilization (%) |
| Auto Components | 65 |
| Capital Goods | 72 |
| Chemicals, Fertilizers & Pharmaceuticals | 74.5 |
| Electronics & Electricals | 78 |
| Machine Tools | 69 |
| Metal & Metal Products | 79 |
| Miscellaneous | 75 |
| Textiles, Apparels & Technical Textiles | 75 |
| Grand Total | 75 (approx.) |
Inventories
- In Q2 2025-26, around 90% of the respondents reported higher or same level of inventory and for Q-3 2025-26, around 83% of the respondents are expecting higher or same level of inventory.
Exports
- In exports, about 69% of respondents reported higher or same level of exports in Q2 FY 2025-26 and in Q3 2025-26 more than 70% of the respondents expect their exports to be higher or same as compared to previous year’s similar quarters.
Hiring
- 38% of the respondents are looking at hiring an additional workforce in the next three months as compared to 35% in the same quarter last year.
Interest Rate
- The average interest rate paid by the manufacturers has been reported to be 8.9%. A little over 87% of respondents reported sufficient availability of funds from banks for working capital or long-term capital.
Sectoral Growth
- Based on expectations, the likely sectoral growth range is shown below:
Table: Growth Expectations for Q-3 FY 2025-26*
| Sector | Growth Expectation |
| Capital Goods | Moderate |
| Chemicals, Fertilizers & Pharmaceuticals | Moderate |
| Electronics & Electricals | Strong |
| Machine Tools | Moderate |
| Metal & Metal Products | Moderate |
| Miscellaneous | Strong to Moderate |
| Textiles, Apparels & Technical Textiles | Moderate |
| Auto Components | Moderate |
* Very Strong >20%; Strong 10-20%; Moderate 5-10%; Low < 5%; Source: FICCI Survey
Production Cost
- Production costs for manufacturers in this quarter seem to remain on higher side. Nearly 57% of respondents reported an increase in the cost of production as a percentage of sales, which is consistent with the previous quarter’s findings, indicating that costs are still on the higher side.
- The increase in cost of production compared to last year is mainly due to higher raw material costs, currency depreciation, and increased logistics, power, and utility costs.
Workforce Availability
- Most sectors though are not facing shortage of labor at factories as around 80% respondents mentioned that they do not have any issues with workforce availability, the remaining 20% feel that there is still lack of skilled workforce available in their sector and there is a need to step up efforts both at government and Industry level.
