The textile and apparel sector of India is at an inflection point
where the businesses are expecting good revenues in the coming months, says a
recent survey. There is an overall positive sentiment as the economy has
started to recover from twin shocks of demonetisation and goods and services
tax (GST). The industry is optimistic about the future.The
economy and industry are getting accustomed to recent policy changes, says
Business Confidence Index by Wazir Advisors authored by Varun Vaid and
Manjulika Poddar. The index is an indicator of what businesses think is going
to happen in the near future. The first of its kind biannual survey was carried
out on 108 respondents in December 2017.
"More
than half the respondents say that the industry’s current performance has been
worse compared to the last six months. However, almost two-third of the
respondents feel that conditions will be better in next six. The industry is
expecting increased demand in the backdrop of an easing liquidity crunch,"
the survey stated.In
general, there is a wait-and-watch sentiment in the industry. Though businesses
are expecting good revenues in the coming months given the positive present and
expected status of the order books, there is hesitation among businesses when
it comes to investment, according to the survey.
Roughly 67 per cent of the respondents view increasing wages as the major
constraint to business growth. This is followed by policy issues as 60 per cent
view it as a major constraint. Polled equally, competition from cheap imports,
low demand, rupee appreciation and rising raw material costs are cited by 47
per cent of the respondents as a key constraint. Unavailability of skilled
labour is cited as a major challenge by 40 per cent of the respondents.
"However, both the central and state governments are working towards
providing fiscal and non-fiscal incentives to boost growth in the industry.
Many state governments are coming up with policies that not only provide direct
fiscal benefits to businesses but also indirect support through infrastructure
development and availability of plug-and-play systems among others. Even the
central government is taking measures to boost investment andtrade such as revision of GST rates on manmade
fibres, rebate of state levies, duty drawback and merchandise exports from
India scheme," the survey pointed out.
Source: DNA India, India Thursday, 25 January 2018