With the nation's manufacturing sector losing pace of growth significantly in the last fiscal, after a series of interest rate hikes intended to curb rising inflation, the Indian industry has demanded immediate government action to check further decline.
According to latest official figures, manufacturing sector's growth slowed down to 5.5 percent in the quarter ended March 31, 2011, from 15.2 percent in the same quarter of 2009-10. Also, the sector's growth for the whole fiscal slowed down to 8.3 percent from 8.8 percent in 2009-10.
Reacting to the recent data, which clearly reinforces the impression of a gradual slowdown in the manufacturing sector, the Council of Leather Exports (CLE) Friday viewed that high costs of power and its nonavailability, hike in petroleum and raw materials prices had caused the slowdown. "I think this should be look into and the costs of manufacturing should come down," CLE Chairman M Rafeeque Ahmed told SME Times.
Commenting on the issue, a FIEO member and also the Chairman of Antique Arts Exports Pvt Ltd., viewed that high raw material prices and hike costly loans were hurting the manufacturing sector.
"This is a set back for the last two or three years. In fact, the raw material prices have shoot up. The fuel prices..interest are also high...these are major set back for slowdown in manufacturing. The government needs to give serious thought to the export and manufacturing sector. Our manufacturing is based on exports," he said.
The taxes are another issue with the refund system so complex , he said, adding that a smooth system is required to help the manufacturing sector and particularly the exporters.
Recently, several industry bodies including the PHD Chamber and the CII had also expressed concern over decline in manufacturing sector's growth. CII Director General Chandrajit Banerjee had even cautioned that the steep rise in interest rates would continue to have an impact on growth of not only the manufacturing sector but also the economy in the current financial year.