The government should formulate a policy to tackle the key issues impending the growth of manufacturing sector, industry body Assocham said today.
The manufacturing sector has been grappling with dwindling demand in domestic and export markets and high cost of credit, Assocham said in a statement.
"There is a need to formulate a clear policy to tackle the key structural issues impending the growth of manufacturing sector," Assocham President Rajkumar Dhoot said.
Belying hopes of an early economic revival, industrial production contracted by 0.4 per cent in September due to dismal performance of manufacturing and capital goods sectors.
Dhoot said that there is an urgent need to develop a manufacturing eco-system and enhance the competitiveness of the sector which is crucial for achieving the objective of sustainable and inclusive growth.
Assocham said that certain essential steps like ensuring land availability for setting up manufacturing industries, securing smooth supply of raw material, providing modern infrastructure would help in boosting the sector's growth.
Majority of the manufacturing companies have said that their overall costs of production would surge significantly due to rise in raw material prices coupled with high expenditure incurred on fuel, electricity and labour, it added.
"...the current level of interest rates are a major concern for the manufacturing industry. Besides, the shortage of skilled and semi-skilled labour, rising prices of imported raw material and poor infrastructure are other critical factors hampering the growth of the sector," it said.
However, the survey said that the sector is expecting improved growth in the coming months.
With an increase in domestic demand orders during the last six months, majority of the 156 respondents said their current domestic sales and production levels have surged significantly as against the position six months ago.