India Inc loses a bit of confidence

Our Bureau New Delhi | Updated on January 17, 2018


Slow pace of reforms lowers business optimism ranking two notches: survey

The Centre may be trumpeting its investor-friendly policies, but India Inc isn’t all that impressed. After being on top globally on the scale of business optimism for two quarters, India slipped to the third position in the April-June quarter, according to the latest Grant Thornton International Business Report (IBR).

Delays in key reforms such as GST, non-resolution of tax disputes and a weak outlook for banks are some of the biggest concerns of Corporate India hurting business optimism.

The good news though is that India continues to top the chart on expectations of revenue increases.

The survey of businesses in 36 economies shows that India has moved up from third to second when it comes to expectations for an upsurge in selling prices. However, growth in employment expectations dropped to second from the top rank. 

“This is a clear signal that while there is optimism in the market and great business opportunity in India, the issue that is bothering investors is the slow progress on key reforms, simplification of tedious government processes and regulatory uncertainties. The passing of GST Bill, which we hope will happen in the current Parliament session, should reverse this trend,” said Harish HV, Partner, India Leadership team,  Grant Thornton India LLP.

The report also shows a decline in the optimism in India as far as investments in new buildings are concerned. Only 30 per cent of the respondents expect an increase compared with 51 per cent in the last quarter when India topped the chart.

When it comes to investment in plant and machinery, only 41 per cent expect a rise. R&D continues to be an area of concern with only 24 per cent expecting an increase, compared with 31 per cent in Q1 2016.

While business confidence in India has fallen, there is optimism on the exports front.

According to the survey, 35 per cent of the respondents expect a rise in exports compared with 13 per cent last quarter. However, the country continues to rank number 2 in citing regulations and red tape as a constraint on growth for two consecutive quarters.

Published on July 15, 2016

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