NEW DELHI: "There has been an increase in the proportion of respondents who feel threatened by imports," Amit Mitra, Federation of Indian Chambers of Commerce and Industry (FICCI) secretary general, said here presenting the third quarterly report for 2002-03. "While it was 14 percent in the last Business Confidence Survey (BCS), the proportion has swelled to 23 percent this time." A total of 521 companies, including big league groups like Reliance, participated in the survey of firms with turnover ranging from 10 million to 600 billion. The sectors covered included pharmaceuticals, fast moving consumer goods, heavy equipment and machinery, food and beverages, petrochemicals, construction, real estate, textiles and financial services. "While the companies surveyed are significantly optimistic about the current and anticipated performance of the overall economy and their own organization, this perception gets diluted with regard to their expectations about the performance of other smaller players in the sector," said Mitra. The impact of increasing globalisation on the Indian industry is apparent, the study reveals. India has emerged as the second biggest filer of anti-dumping cases in the world. This lends support to the perception that Indian companies view the possibility of government lowering import duties on several commodities as a threat. On the other hand, "the prospect of a further reduction in import duties on raw material and capital goods in the forthcoming budget has elicited a welcome response from India Inc as 45 percent feel the impact of such a reduction would be positive". As many as 86 percent of companies were confident of either maintaining their current levels of exports or going much higher in the coming six months. For the third consecutive quarter, weak demand emerged as the most pressing problem faced by the industry, with 61 percent of respondents expressing concern. To increase demand, Mitra said, it was essential that government enhance capital expenditure on infrastructure while on the supply side, through lower personal income tax rates, the consumer ability to buy can be boosted. Poor market conditions were leading to excess capacity, with most companies planning no further expansion. Only 26 percent of those surveyed revealed plans to investment more in expanding operations in the next six months. The government's preliminary estimates indicate a much lower economic growth of 4.4 percent as against the earlier expectation of over 5.5 percent. However, Mitra said: "We would like to wait for the final data before making our observations. We still expect close to 5.4 percent economic growth, lower than our earlier expectation of 5.9 percent." In their wish list for the budget, the Indian industry has cautiously welcomed the recommendations of an expert committee on direct and indirect taxes. "The majority of companies were of the view that a phased reduction in exemptions and tax rates would be the most appropriate step," said Mitra. "These responses lend credence to the view that India Inc. is supportive of reforms as long as they are given adequate time to adapt themselves to the new situation." Most respondents felt the current overall economic conditions in the country were "moderately to substantially better" compared to the last six months.
Source: IANS