Manufacturing firms set to make ma­jor in­vest­ments: FICCI-PwC sur­vey

FICCI Business Digest - - Special Features -

Bman­u­fac­tur­ing usi­ness lead­ers in the

sec­tor are op­ti­mistic about per­for­mance of their busi­nesses and the sec­tor as a whole over the next 12 months. The com­pa­nies, which par­tic­i­pated in this sur­vey, do not ex­pect any de­cline in their own busi­ness rev­enues or their industry's rev­enue in this pe­riod.

They be­lieve that the stated in­tent of the gov­ern­ment to re­move ob­sta­cles to busi­ness per­for­mance fol­lowed up with ap­pro­pri­ate ac­tion on the ground as also eas­ing of the global eco­nomic sce­nario will pro­vide the much needed boost to GDP and the manufacturing sec­tor go­ing ahead.

As per the In­dian Manufacturing Barom­e­ter 2014 - sur­vey by FICCI and PwC re­leased in New Delhi on De­cem­ber 12, 2014, 55% of the re­spon­dents ex­pect to make ma­jor in­vest­ments over the next 12 months. Forty nine per cent of the sur­veyed com­pa­nies plan to add ca­pac­ity. Re­search & De­vel­op­ment, new prod­ucts or ser­vices in­tro­duc­tion and fa­cil­i­ties are the three pri­or­ity ar­eas of in­vest­ment for over 45% of th­ese re­spon­dents.

Th­ese re­flect an in­crease in the level of op­ti­mism and ac­tiv­ity as com­pared to the find­ings in the Manufacturing Barom­e­ter sur­vey con­ducted in 2013. Last year, while six per cent had ex­pected their own busi­ness rev­enues to de­cline, 20% re­spon­dents had ex­pected their industry's rev­enue to de­cline, over the next 12 months. Sev­eral cor­po­rate lead­ers said that the sec­tor saw signs of im­prove­ment in FY14. More than half the re­spon­dents (56%) said they man­aged to keep prices of goods up in FY14. Fin­ished in­ven­to­ries re­mained steady for nearly half the re­spon­dents.

In­dian man­u­fac­tur­ers also ex­pect the gov­ern­ment to sim­plify ex­port im­port (EXIM) poli­cies and re­lated doc­u­men­ta­tion, ra­tio­nalise the tax struc­ture and im­ple­ment Goods and Ser­vices Tax (GST). Mod­i­fi­ca­tion of land ac­qui­si­tion rules, speed­ier clear­ances and li­cens­ing, and amend­ments to labour laws are fac­tors they be­lieve will fa­cil­i­tate in­vest­ments.

Bi­mal Tanna, Leader In­dus­trial Manufacturing at PwC In­dia said, "With ris­ing costs in other global manufacturing hubs such as China there is per­haps an un­par­al­leled op­por­tu­nity for In­dia to step into the breach and cap­ture a sig­nif­i­cant share of the global manufacturing pie. Yet, the road ahead is not with­out chal­lenges with sev­eral in­fras­truc­tural and reg­u­la­tory bot­tle­necks. Busi­ness lead­ers are look­ing to the gov­ern­ment to ra­tio­nalise taxes and reg­u­la­tory poli­cies and pro­cesses to fa­cil­i­tate in­vest­ments and in­fras­truc­ture de­vel­op­ment".

"The world econ­omy is re­cov­er­ing from a pro­tracted slow­down. In­dia is re­vamp­ing its brand im­age by 'Make in In­dia' cam­paign to es­tab­lish a foot­print in world class manufacturing. FICCI and PwC be­lieve that a se­ries of short and long-term mea­sures will help take the manufacturing sec­tor to the next level of growth. In the short run, the gov­ern­ment needs to stream­line reg­u­la­tory pro­cesses and take mean­ing­ful con­fi­dence-build­ing mea­sures. In the long run, a mod­ern set of laws in the ar­eas of tax­a­tion, labour, FDI, land ac­qui­si­tion and en­vi­ron­ment needs to be im­ple­mented".

M M Singh

Chair­man, FICCI Manufacturing Com­mit­tee

"In the com­ing months we can ex­pect some bold mea­sures from the Gov­ern­ment to en­cour­age in­vest­ments and boost in­vestor con­fi­dence. We are also look­ing for­ward to the forth­com­ing bud­get for driv­ing growth in manufacturing. Struc­tural bot­tle­necks have sig­nif­i­cantly slowed down the growth and in­vest­ments in In­dia. In­vest­ment growth has weak­ened in the last few years em­pha­sis­ing the need for sig­nif­i­cant im­prove­ment in the reg­u­la­tory busi­ness en­vi­ron­ment in In­dia be­sides other struc­tural re­forms".

Shyam Bang

Co-Chair­man, FICCI Manufacturing Com­mit­tee

Launch of the FICCI-PwC 'In­dia Manufacturing Barom­e­ter'.

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