Manufacturing sentiment in India rebounded sharply in the second quarter of FY27, with 95% of surveyed firms reporting higher or unchanged production, up from 77% in the previous quarter, according to the latest FICCI Quarterly Survey on Manufacturing released on 6 October 2026.
The survey, which covered around 225 firms with a combined annual turnover of more than Rs 2 lakh crore across nine major sectors, points to a broad-based pick-up in production, order volumes, capacity utilisation, exports and hiring intent. Demand improved alongside output, with 90% of respondents reporting higher or unchanged order levels against 77% in Q1 FY27. Average capacity utilisation rose to around 75.5% from 72% in the previous survey.
FICCI said the responses indicated signs of recovery from the prevailing geopolitical situation. “This edition of the manufacturing survey reflects rebound in the sentiment for production compared to the previous quarter indicating recovery signs from the prevailing geopolitical situation,” the industry body said in a statement, adding that “export diversification efforts by the government and industry seem to be yielding results.”
Among the nine sectors surveyed, automotive and auto components recorded a strong growth outlook. Machine tools and metal and metal products were expected to see strong-to-moderate growth, while capital goods, glass, chemicals and allied products, electronics and electricals and textiles were projected to see moderate growth.
The hiring picture also strengthened. The FICCI release pointed to stronger hiring intentions across the surveyed sectors, with most sectors not reporting labour shortages at factories. For the automotive sector, however, FICCI flagged that the unavailability of labour, raw materials and components remained the most significant constraints.
Cost pressure was the main area of concern. Around 83% of respondents reported an increase in production costs as a share of sales, compared with 79% in the previous quarter, which FICCI said reflects the squeeze from input prices and ongoing supply-side pressures. The investment outlook for the next six months remained steady, with manufacturers continuing to prioritise capacity expansion where demand visibility exists.
The rebound comes after the Q1 FY27 survey, released in late June, had flagged a moderation on the back of the West Asia crisis. The latest numbers suggest the sector has absorbed those shocks and that domestic demand, supported by recent GST rate changes, has resumed as the primary growth driver.
