Talking Point: Protectionism to hit Indian exports: FICCI

“While global growth is improving gradually with most parts of the world showing better performance, the rising tide of protectionism and advent of inward looking policies to promote growth and jobs ‘at home’ could impact export performance,” the Federation of Indian Chambers of Commerce and Industry said in a release here, citing its latest Business Confidence Survey. 

This comes at a time the Indian industry is already grappling with low demand as most companies are not getting the benefit of credit flow at lower rates, FICCI said.  Around 67 per cent of the participants in the FICCI survey responded in the negative when asked if they have benefited from the lower cost of credit. 

Union Finance Minister Arun Jaitley said here on Friday that India has been a big beneficiary of globalisation in the way of foreign investment, especially at a time when private domestic investment has been sluggish. 

Foreign direct investment (FDI) inflows into India in 2016 jumped 18 per cent to a record $46.4 billion, at a time when global FDI inflows fell. Moreover, investments by foreign institutional investors (FIIs) into Indian equities and bonds in March hit a record high in about 15 years. 

Overseas investors bought $8.84 billion worth of Indian shares and bonds during March in the biggest monthly inflow since 2002. The FICCI survey, conducted during this March-April, saw the sampling of nearly 185 companies. The impact of the November 8 demonetisation of high-value currency seems to have ebbed at a much faster pace than earlier anticipated. 

“Results of the Business Confidence Survey indicate that the impact of demonetisation move of the government seems to have ebbed at much faster pace than earlier anticipated,” FICCI said. “With remonetisation of the economy at a much advanced stage, things seemed to be turning normal for the corporate sector. In the latest survey, confidence level has seen a rebound, touching an eight-quarter high, vis-à-vis a drop seen in the previous survey wherein confidence was hit due to a demand squeeze caused by demonetization,” it added. 

The outlook, pertaining to the period April-September 2017, showed nearly 65 per cent of the companies expect better sales performance, 42 per cent expect profits to increase, and 40 per cent expect to invest more than their current investments levels.