• India ranks 1st in the exports optimism index in H1 2019
  • Employment expectations rank improves to 3rd
  • Continues to rank 3rd in considering economic uncertainty as a constraint

India has recently been surrounded with economic uncertainties due to the depreciating Indian rupee against the US dollar and the impending results of the general elections. Despite these uncertainties, India continues to have the highest export expectations with 65% of the respondents voting for an increase in exports in H1 2019, says Grant Thornton’s International Business Report (IBR). However, India continues to rank 3rd in citing economic uncertainty as a constraint for growth.

While employment has been a burning issue since the Modi government came into power, the survey shows that Indian businesses are optimistic about a rise in employment in the second tenure of the government. India takes the 3rd position on the employment expectations index as against 4th in H2 2018 with 64% of the respondents expecting an increase in employment in the days to come.

The IBR report gathers responses biannually from 5,000 business leaders in 35 economies including the G20 and has a sample size of more than 250 respondents in India.

The overall optimism remains muted as India continues to rank 4th in H1 2019 with 64% respondents displaying confidence in the economic growth. The IBR reveals that global optimism has fallen to a three-year low and economic uncertainty remains elevated.

Vishesh C Chandiok, CEO, Grant Thornton India LLP, said:

“Contrary to the general pessimism all around, I’m glad to note from our H12019 #GTIBR survey that Midmarket Indian businesses continue to share the optimism that RBI’s consumer confidence survey of March showed. Stock market performance or FPI noise shouldn’t influence long term oriented businesses in what is clearly the golden era for India.”

In tandem with the subdued economic optimism, India Inc.’s dismal sentiments reflect in its expectations for an increase in revenue, selling prices and profitability. In H1 2019, India slips to the 5th position from the 4th in H2 2018 on revenue expectations, while on the selling prices and profitability expectations parameters, the country slips to the 8th position from the 6th and the 5th position from the 3rd, respectively.

India saw a major jump in investment parameters in H2 2018 as against Q2 2018. However, in H1 2019, businesses in India are more optimistic about investing in new building where the country ranks 3rd as against 5th in H2 2018 than in plant and machinery where India slipped to the 5th position from 4th in H2 2018. India Inc. is quite positive about investing in new technologies with 75% of the businesses expecting an increased investment in technology. The country remains at 4th position in expecting an increase in R&D investment.

While there are high expectations of an increase in employment in the country, Indian businesses continue to highlight the lack of skilled workforce as a concern for growth, with India ranking 1st again on this parameter in H1 2019. Businesses also cite regulations and red tape and shortage of finance as key hurdles for business growth as India ranks 1st and 2nd respectively in quoting these concerns.