Companies call for greater transparency and clarity of regulatory procedures, processes and policies
Indian companies, responding to a Jan-Feb 2021 survey by FICCI, has pointed out that leaving trade policy issues unaddressed will create an even bigger challenge from China as well as other countries including Vietnam, especially in regaining market share to become global suppliers.
Lack of adequate export incentives is also making it difficult for Indian entrepreneurs to compete globally in 2021, the companies said in response to FICCI’s Business Confidence Survey, findings of which were released on 6 Mar 2021.
Subdued economic conditions in advanced economies has led to global slowdown in consumption activity. Alongside, impact of COVID-19 pandemic on the Indian economy left consumers fending for basics, raising the precautionary motive of spending amongst them, said the companies.
This impacted domestic consumption gravely. While some improvement in demand has been witnessed over the past few months, participating companies in the survey fear that fresh waves of COVID-19 infections, as seen in other countries, would be extremely challenging to cope with. They believed that retaining the revival in demand conditions can get challenging going forward.
Furthermore, respondents also felt that availability and retaining of skilled labor would be a worrisome factor in 2021.
For further boosting manufacturing, the respondents opined that improving ease of doing business remains the most important component to give a thrust to India’s manufacturing prowess.
Greater transparency and clarity of regulatory procedures, processes & policies; definite timelines and smooth approvals of licenses, projects & other government services; truly single window approval system; reduction in bureaucratic interference; simplification of GST refund process were some of the areas that were highlighted by the participants for further action.
They added that efforts must also be made to reduce the cost of doing business by enhancing infrastructure creation as well as achieving cost efficiency in logistics and supply chain management.
In addition, continuous availability of credit at a reasonable cost to the entire industry, with special focus on improving credit flows to MSMEs will be vital to sustain recovery.
Respondents to the survey suggested that long-term incentives to industry, particularly towards skill upgradation of employees and workforce was the need of the hour. They were looking forward to the new and simplified labor laws as these would enhance our manufacturing competitiveness.
In addition, the companies stressed on the need for reducing customs duty on imports to curtail rising domestic prices of raw materials. Commodity prices have risen drastically in the past few weeks and this is impacting profitability and viability of business.
Participants of the survey highlighted that restrictions on imports must be removed at least until India achieves some level of production of industrial inputs such as components and parts.
Lastly, it was felt that Industry 4.0 initiatives including artificial intelligence, machine learning, internet of things, increased automation and digitization must be promoted more rigorously to remain ahead of the curve.
Greater focus and incentives must be spelt out for R&D activities of industry to enable faster technological adoption, the companies told the survey.
Outlook on employment and exports also reported a discernible improvement. About 35% respondents were optimistic about better hiring prospects over the next two quarters (up from 22% stating the same in the previous round). Export prospects were also reported to be better in the current round with 41% respondents indicating higher outbounds shipments. The corresponding number in the previous round was 27%.
The present survey drew responses from a wide array of sectors and was conducted during the months of January and February 2021. The survey gauges expectations of the respondents for the period January to June 2021.
However, rising raw material costs is emerging as a bothersome factor for members of India Inc. The rise in fuel and other commodity prices is beginning to exert pressure on the input costs of companies.
With demand situation slowly turning positive, an improvement was also noticed in capacity utilization rates. In the current survey, around 77% participating companies reported capacity utilization of more than 50% as compared to 68% stating likewise in the previous round.
However, the participants did express some scepticism about the sustenance of buoyancy in demand. The rise in the number of COVID-19 cases across some states can act as a dampener. #exports #manufacturing #investment #projects #demand #consumers /fiinews.com
