New Delhi: Manufacturers of electrical products, turnkey projects, and food processing are operating at lower capacity, a survey said on Tuesday, as businessmen sought tax cuts to overcome the slowdown.
Capacity utilisation in these industries was down by 8-25% from the previous year, the Federation of Indian Chambers of Commerce & Industry, which conducted the survey, said.
A slow down in production was also visible in textiles, farm machinery, polymers, leather, pipelines and boilers, FICCI said.
Investment plans in textiles, machinery components, electrical products, project equipments and thermal transfer equipments have also been scaled down, the survey showed.
High interest rates, a firm rupee, rise in input costs and fall in demand for some consumer durables dampened output growth, FICCI said.
Asia’s third largest economy is expected to grow 8.7% in 2007/08 moderating from 9.6% expansion of last year.
“While the slowdown in the Indian manufacturing sector is not pervasive and has affected only some sectors, but it is a cause for concern,” the survey said.
“The slowdown may continue for some more time given the current economic scenario.”
The government needs to boost demand by reducing corporate tax and excise duty rates and allow a larger rate of depreciation on machinery in the budget, FICCI said.
It also proposed a cut in interest rates and relief package for exporters who have been hit by the 12% gain in the rupee last year.
India’s finance minister will unveil the budget on 29 February.