India's manufacturing sector to take a hit as costs of commodities rise

New Delhi, March 10 India's manufacturing sector is expected to take a hit as commodities' costs have risen due to the ongoing Russian-Ukrainian crisis.

At present, international prices of crude oil, natural gas, coal, nickel, copper, aluminium, titanium, palladium have risen to multi-year high levels. The raw material prices will impact the sector which was already reeling under expensive commodities costs due to rise in their international demand and supply constraints.

Moreover, India is a major importer of these precious as well as industrial commodities.

"Due to higher crude prices, we may see higher freight charges, which will impact perishable and non-perishable commodities," IIFL Securities VP, Research, Anuj Gupta said.

"Services and the manufacturing sectors may be impacted badly due to higher prices. Higher commodity inflation is expected to impact India's GDP growth rate."

Besides, lower manufacturing growth will have a direct bearing on the country's GDP growth as well as job creation.

"We had expected Indian GDP to grow by 8 per cent in FY2023, boosted by a low base in H1, albeit contingent on the GoI's budgeted Capex kicking-off early," said Aditi Nayar, Chief Economist, ICRA.

"However, protracted geopolitical tensions and high commodity prices pose large downside risks, with margin compression set to squeeze value added growth during the period of the conflict."

Earlier, the seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index

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