The Indian industry is on a firm path to recovery following policy measures to mitigate the impact of the pandemic and businesses showing a tangible improvement since the lockdown, according to a survey by the Federation of Indian Chambers of Commerce and Industry of India (FICCI).
The prospect of a Covid-19 vaccine has further improved the confidence level of businesses. With improvement seen in the economy, nearly 40 % of the surveyed companies are currently operating at a capacity utilisation level of over 70 %, vis-a-vis 30 % of the companies in August.
Half of the companies have reported an increase in their order books and 40% have seen an increase in exports. The picture was much more dismal in August when a similar survey was conducted.
Around two-thirds of the latest survey respondents said that there will be a significant positive impact once the vaccine is released. Covid-19 related transport disruptions have hurt smooth conduct of business operations, which have been overcome to a degree through greater reliance on digitisation.
Given the benefits of technology that companies have woken up to post the pandemic, 64% of survey respondents said that they will rely on a mix of travel and virtual meetings henceforth even after the situation normalises.
Indian businesses are also optimistic that a major outcome of the pandemic will be a likely shift in global supply chains away from China to other economies, which will be beneficial for India.
“This momentum needs to be built upon and now all eyes are on the upcoming budget. Government has been seeking growth inducing ideas and we have shared several suggestions,” said Uday Shankar, president of FICCI.
“The context of this budget is completely different due to an unprecedented social and economic challenge. We are sure that the government will take bold steps to respond to these challenges,” he said.
Support measures expected
The survey participants expect both the government and Reserve bank of India (RBI) to continue with their support measures even next year. There is a strong demand that the upcoming budget must prioritise growth-oriented measures, including a cut in direct tax rates.
The stimulus measures introduced by the government for a revival have been well received by the industry, with 45 percent of the companies rating the latest set of announcements made under Atmanirbhar Bharat package 3.0 as ‘good to excellent’.
There is a need to strengthen India’ manufacturing ecosystem to capitalize on such opportunities. Under the Atmanirbhar Bharat package, the government has introduced several measures to address the immediate pain points to improve India’s manufacturing competitiveness, say the respondents.
Despite buoyant sentiments, the survey results showed that businesses continue to face challenges on account of weak demand (59 %), higher costs (54 %) and financial liquidity (48 %).