Corporate India cautious in making new investments: FICCI

India Inc remains cautious of making new investments as slow demand is a key overhang for the business.

The Dollar Business Bureau

India Inc remains cautious of making new investments as the slow demand is a key overhang for the business, there are also apprehensions over muted recovery in the industrial sector, said a survey.

The economic situation globally continues to be weak and any strong recovery remains elusive as 64 percent of the respondents have signaled that the situation remains alarming, revealed the FICCI Business Confidence Survey.

The survey gathered responses from around 120 companies having a turnover between Rs.3 crore to Rs.65,000 crore, spread across various sectors. It measured the expectations of the respondents from April 2016 to September 2016. 

Around 35 percent participants said that they are expecting more investment during April-September compared to 41 percent in the previous round. However, the firms continue to be concerned on making new investments. About 46 percent respondents did not see any change in the investment level.

 “Given the slew of measures undertaken in the past two years to kickstart investments, the respondents were asked to indicate if they have witnessed any improvement in investment activity in and around their area of operation and a majority of them said they are yet to see investment fructifying,” said FICCI in a statement.

The respondents, who pointed out that the things are getting normal, reported activity mainly in the infrastructure projects such as roads and highway, defence, railways and renewable resources.

However, the Overall Business Confidence Index was at 64.3 in the current round, seven points higher as against the 56.7 in the previous one.

Taking into account the outlook, with regard to the different parameters such as exports, sales and the employment, it showed an improvement. However, the respondents still don’t seem bullish about the prospects of the investment and also the profit level improvement. Apart from all this the muted investment in the industrial sectors still remains an issue.

“The expected pick-up in sales in spite of intention for investment continues to be subdued, shows that companies are looking to roll out the unutilised capacity,” FICCI said.

The Dollar Business Bureau - Jun 20, 2016 12:00 IST