About 93% of respondents reported higher or unchanged production levels in Q4FY26, up from 91% in previous quarter, indicating continued expansion across sectors.
Domestic demand also remained resilient, with 89% of respondents expecting orders to remain stable or increase over the previous quarter.
Manufacturers, however, faced elevated cost pressures. About 70% of respondents reported a rise in production costs as a share of sales in the March quarter compared with 57% in the December 2025 quarter, due to higher raw material prices, currency depreciation, and increased logistics, power, and utility costs.
The survey covered over 250 manufacturing units across large and SME segments with a combined annual turnover of over Rs 8 lakh crore. It was released earlier this week.Capacity utilisation moderated to around 72% compared to previous quarter. Across sectors, textiles recorded the highest average capacity utilisation at 76.4%, followed by metal (76%), automotive & auto components (75.7%), chemicals, fertilisers & pharmaceuticals (75%), machine tools (70%), capital goods (69%), and electronics & electricals (68%).
Yet, manufacturers remain optimistic about investment prospects over the next six months, and 41% of the respondents said they planned to hire additional workers over the next three months, up from 38% in Q3.
Export sentiment also improved, with around 80% of respondents expecting exports to be higher or the same compared with 74% in Q3.
Over 86% of manufacturers reported sufficient availability of bank funding for working capital or long-term capital.
The average interest rate paid by the manufacturers stood at 8.85%, according to the survey.
Firms cited trade restrictions, labour availability, raw material shortages, and regulatory challenges as key hurdles to capacity expansion.