Slipping business confidence - all's not well with India Inc.

Top Stories

»	25 pc US tariffs over trading with Iran: What it means for India
»	Sensex, Nifty open lower over US imposing 25 pc tariffs on nations trading with Iran
»	Q3 earnings, inflation data and US tariff uncertainty likely to drive Sensex, Nifty next week
»	Centre aims to transform 100 high-potential districts into Global Export Champions
»	PHDCCI seeks incentives in Budget 2026-27 to push growth of MSME sector

Bikky Khosla | 19 Oct, 2010
It's sad to see the confidence of the Indian industry slipping recently with businessmen expressing concern over high interest rates, inflationary conditions, unavailability of labour, low consumer demand and rising cost of production. With the Indian festive season already on and Christmas and New Year just a couple of months away, slackening demand can indeed make the business community jittery.

The more I look at the findings of CII's 74th Business Outlook Survey, the more I feel that the quarter ending December will not be a healthy one in terms of performance as compared to the previous quarter.

The foremost reason which I feel is pulling down the business confidence of India Inc. is probably their anticipation that availability of credit will still remain a distant reality coupled with higher raw material prices. In addition another baneâprocedural delaysâis also not expected to decline in the coming months which makes businesses, especially exporters, skeptical of the situation.

The situation doesn't end here. Foreign capital inflows have led to a sharp rise in the rupee in the second half of 2010 and has now forced exporters to seek government intervention in curbing such inflows.

The anxiety of exporters is understable because they fear that if the rupee continues to appreciate like this, it would adversely impact their profitability as also their competitiveness. With the largest software exporter Infosys seeking the Reserve Bank of India's intervention in curbing the appreciating currency, one can understand the plight of small exporters.

The rising rupee is not only putting margins of domestic manufacturers under pressure, it is also putting pressure on exporters who stand to lose out on their future orders. I strongly believe that the RBI should intervene to halt heavy FII inflows to reduce the currency volatility.