Manufacturers anticipate an improvement in demand conditions

Reserve Bank of India (RBI) released the results of 110th round of its quarterly industrial outlook survey (IOS) today. The survey encapsulates qualitative assessment of the business climate by Indian manufacturing companies for Q1:2025-26 and their expectations for Q2:2025-26 as well as outlook on select parameters for the subsequent two quarters. A total of 1,315 companies responded in this round of the survey2 conducted during April-June 2025.

Assessment for Q1:2025-26 stated that manufacturers reported seasonal moderation in demand conditions as compared to the previous quarter, as reflected in their assessment on production, order books and capacity utilisation. Input cost pressures eased marginally; however, majority of the respondents polled for increase in input costs. Overall, business sentiment in the manufacturing sector as measured through business assessment index moderated during Q1:2025-26.

Manufacturers anticipate an improvement in demand conditions as reflected in their improved expectations on production, order books, capacity utilisation and exports. Manufacturers remain highly optimistic on production, order books, capacity utilisation and overall business situation during Q3 and Q4:2025-26. Input cost pressures are likely to persist for manufacturers, they also expect pricing power to pass on the rise in selling prices.

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