Reserve Bank released the results of 109th round of its quarterly industrial outlook survey (IOS). The survey encapsulates qualitative assessment of the business climate by Indian manufacturing companies for Q4:2024-25 and their expectations for Q1:2025-26 as well as outlook on select parameters for the subsequent two quarters. In all, 1,310 companies responded in this round of the survey conducted during January-March 2025.

Manufacturers reported improved demand conditions as reflected in their assessment on production, order books, capacity utilisation, and exports. Pressures from input costs and staff cost increased during Q4:2024-25. Majority of the responding firms polled for no-change in selling prices and profit margins. Business assessment index (BAI) for the manufacturing sector improved in Q4:2024-25.

Manufacturers remained optimistic on demand conditions in Q1:2025-26; the optimism was, however, lower when compared to that in the previous quarter, which is partly seasonal. Pressures from input costs and finance cost are expected to ease in Q1:2025-26, while pressures from salary outgo are likely to increase. Respondents expect some moderation in growth of selling prices and profit margins, in sync with their expectations on demand conditions.
Business expectations index stood firmly in growth terrain at 117.5 in Q1:2025-26 though it moderated from its level of 120.0 in Q4:2024-25. Manufacturers perceive sequential improvement in production, order books, capacity utilisation and overall business situation during Q2 and Q3:2025-26. Input cost pressures are expected to persist till end-2025 with rise in selling prices.

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