Grant export incentives to improve biz confidence: ASSOCHAM | SupportBiz


Grant export incentives to improve biz confidence: ASSOCHAM

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has urged the government for liberal export incentives to bridge the trade gap, so that exports remain much more lucrative than the domestic market.

The trade body, in its quick survey, also said that the industry and exporters are waiting for the new foreign trade policy.

The business confidence of India Inc has taken a back seat in the last few weeks as the foreign institutional investors have started withdrawing, posing a big question on the source of financing the country’s wide current account deficit, the survey pointed out.

The mood among the industry has turned worse days before the earning season for the corporates kick off next week. Most of the analysts have concluded that the corporates in a host of sectors like realty, FMCG, pharmaceuticals, automobile, PSU banks, telecommunication and infrastructure are going to take a beating in their earnings, further damaging the market sentiment.

Owing mainly to the capital inflows in the stock market, the gap in the current account deficit was filled in and the country did not have to deplete its foreign exchange reserves. But going forward, the FII funds may be tricky if the market capitalization erodes.

Prospects for the merchandise exports do not seem very promising either in the face of the US disappointing the financial markets with disappointing job data. The indicators showed that the US recovery still faces bumps with significant implications for the rest of the world.

Imports, on the other hand, are increasing at a much faster rate creating problems for the CAD which would be well above five per cent of the GDP for the fiscal 2012-13. As a percentage of the GDP, the imports would be close to one-third.

The big-time reforms which could uplift the mood look distant even though measures like sugar decontrol have generated some sectoral enthusiasm.

“85 per cent of the respondents said that it is possible to return to the 8-9 per cent growth, but that would be quite a distant away and the country’s growth aspiration has certainly gone down. Despite government goading them, the PSUs are not willing to invest while the private sector is hard pressed for cash in any case. The emphasis in the private sector seems to be more on balance-sheet repairing than winning fresh pastures,” the survey report concluded.