Perhaps, it is a reflection of the emerging consumption trends in the consumption industry created by higher economic growth and disposable incomes- India's airconditioners market witnessed the highest growth while edible oil markets slumped in April 2010-March 2011 in a year when majority of the industry sectors showed higher growth according to the latest Confederation of Indian Industry (CII)-ASCON survey.
Sectors reporting excellent growth rates are Air conditioners (29.4%), Tractors (25%), Fertilizer (37.2%), Capacitors (LT & HT) (20.6%), Ball and roller bearings (33%), Earth moving and construction equipment (30%), Vehicle industry (28.2%), Tyre Industry (24%), Textile Machinery (25.0 %), Machine Tools (51.0%), Nuclear Electricity (39.9%) etc.
Some of the sectors recording high growth are Utility vehicles (17.6%), Motor starters (18.0%), Natural gas (14.4%), Crude oil (11.9%), Transmission line Towers (12.3%), Power Transformer (11.9%), Motors LT (12.2%), Energy meters (19.6%), Home and Personal care (12.0%), Automation industry (10.5%), Alcoholic Beverages (13.5%), Biscuit (19.5) etc .
Sectors registering moderate growth of 0-10% in April-March 2010-11 include Caustic soda (4.9%), Soda Ash (9.0%), Cement (4.4%), Refinery (2.4%), Steel (7.8%), Rubber goods (6.5 %), Ceramics (3.0%), and Bus and truck tyre (6.0%).
Motors (HT) (-1.5 %), Tea (-2.7%), Asbestos Cement (-6.1%), Edible oils like Sunflower oil (-12.0%), Rape/Mustard (-0.5%) are in the negative zone, CII-ASCON survey said.
"Inspite of high inflation and rising input cost, a vast majority of industry sectors are set to record higher growth in financial year 2010-11 than in the previous year", said Mr. Chandrajit Banerjee, Director General, CII.
Out of 121 sectors covered by the CII ASCON survey, 41 sectors (33.8%) showed excellent growth rate of more than 20% in April-March 2010-11 compared to 34 sectors (28.0%) in April-March 2009-10 which shows a marked improvement. The sectors registering high growth rate have decreased from 30 (24.7%) in April-March 2009-10 to 26 sectors (21.4%) in April-March 2010-11. This is because more sectors have shifted to the excellent growth segment.
The survey also highlights some of the general and sector specific issues faced by the industry. The general issues constraining the performance of industry include: Lack of proper Infrastructure in the areas of Power, Transport and Water, shortage of skilled labour, poor availability of finance especially micro finance, delays in environmental clearances, no proper government policy in case of land. The recent increase in the price of coal for captive power plants has increased costs for many manufacturing sectors.
The survey also revealed that multiple agencies in decision making, absence of sector specific interactions, lack of structured response and two way communications between government and industry are also constraining factors for industry.
The sector specific issues pertain to: Indiscriminate import of second hand and cheap old technology textile machinery, no incentives by government for exporting caustic soda and soda ash to other countries, unfair competition from spurious products pertaining to ball & roller bearing, High rate of Vat @12.5% for the biscuit industry, shortage and high prices of HR Coils, the basic input for the production of Cold Rolled products, inconsistency in the supply of Natural gas both in terms of quality and quantity is seriously affecting sponge iron production, problems due to inverted duty structure on rubber latex is a major concern for tyre industry.
These issues need to be addressed by the government at the earliest for industry to maintain its high growth momentum. According to Mr. Chandrajit Banerjee, Director General, CII "Many sectors are coming under pressure due to the rising cost of raw materials and fuel. Rising interest costs will put further pressure on their margins in the coming year. To allow industry to expand capacities, the government should pursue the reform agenda which includes several forward looking steps including streamlining land acquisition and faster environment clearance for various projects."
