India's manufacturing sentiment hits record high in Q3 FY26: FICCI

India’s manufacturing sector has continued to show strong momentum in the third quarter of fiscal 2026 (FY26), with business sentiment reaching a record high, according to the latest survey by Federation of Indian Chambers of Commerce & Industry (FICCI).

The index touched an all-time peak, as 91 per cent of respondents reported higher or unchanged production levels in the third quarter (Q3) of FY26, up from 87 per cent in the previous quarter.

Optimism was also reflected in domestic demand, with 86 per cent of manufacturers expecting higher or stable order books during the October–December FY26 period, supported further by recent GST rate cuts. The 68th edition of FICCI’s Quarterly Survey on Manufacturing assessed eight major sectors, covering both large and SME units with a combined annual turnover exceeding ₹3 lakh crore (~$33 billion).

Average capacity utilisation across manufacturing stood close to 75 per cent, signalling sustained economic activity. Textiles, apparels and technical textiles reported utilisation of 75 per cent, while capital goods stood at 72 per cent, chemicals, fertilisers and pharmaceuticals at 74.5 per cent, and machine tools at 69 per cent, FICCI said in a release.

Based on industry expectations, FICCI indicated moderate growth of 5–10 per cent for Q3 FY26 across key sectors including textiles and apparels, capital goods, chemicals, fertilisers and pharmaceuticals, and machine tools.

The investment outlook for the next six months remains steady, although respondents highlighted reminders such as global and geopolitical uncertainties, trade restrictions, labour availability, raw material shortages and regulatory challenges. On exports, over 70 per cent of respondents expect shipments in Q3 FY26 to be higher or unchanged compared with the same period last year.

Employment sentiment also improved, with 38 per cent of firms planning to hire additional workers over the next three months, up from 35 per cent a year earlier. Manufacturers reported an average interest cost of 8.9 per cent, while more than 87 per cent indicated adequate access to bank funding.

However, cost pressures persist, with 57 per cent citing higher production costs driven by raw materials, currency depreciation, and increased logistics and energy expenses.

Fibre2Fashion News Desk (HU)