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 and tradesuch as revision of GST rates on manmade fibres, rebate of state levies, duty drawback and merchandise exports from India scheme,” the survey pointed out.