India resilient in the face of adversities

• Ease of doing business improves; growing confidence in government to take on complex reforms - Over 70% of the CFOs expressed satisfaction on the timeline of government programs and 63% of CFOs found the initiatives effective
• Increased optimism in business; growing confidence in economic outlook- 59% of the CFOs are now willing to take greater business risks vs 46% last year. 
  

New Delhi, 2 August 2017: Optimism about India’s economic prospects have reached new heights as the country remains buoyant post demonetisation and amongst global uncertainties. According to Deloitte’s annual CFO Survey, for 2017, CFOs are already on the road to recovery from the recent economic and regulatory disruptions, willing to take investment risks. Given macro-economic trends that point to a possible global growth revival, there will be opportunities to increase exports and investment which have been a concern for the past few quarters.

The survey represents the viewpoint of over 200 CFOs in India. The respondents include listed and unlisted companies, from both private sector and PSUs; Indian companies, MNCs headquartered in India as well as overseas.

Commenting on the impact and implementation of GST, Porus Doctor, Partner, Deloitte Touche Tohmatsu India LLP said, “The implementation of GST has been a complex change management exercise for every organisation, but it is a much awaited and welcome policy development across industries.”

These regulatory changes along with the upcoming technology up-gradation have led the companies to withstand critical transformations in order to stay ahead in the race of unseen competitive threats.

In comparison to last year’s CFO Survey results, the CFOs’ near-term, medium-term and long-term priorities are almost same in terms of profitable growth. Business partnering and compliance to changing regulatory environment has witnessed a growth of 5 percentage points and 7 percentage points respectively, for the CFOs near-term priority versus last year.

With the Indian economy adopting GST, companies have shifted their focus to supply chain modification, inventory cost management which might disrupt their working cycles. This change could fuel inflation in the economy as the tax burden has risen. However, it is believed that better flow of input credit will negate the impact of higher rates on services.

Macro economy

In comparison to last year’s survey, a positive expectancy has been observed among business leaders with respect to India’s medium to long term economic outlook. 30% and 56% of CFO’s are now ‘very optimistic’ about economic prospects over the next 2-3 years and 4-5 years, respectively. Thus, results in a substantial increase in business confidence and the willingness to take risks bodes well for capital investment growth.
51% of the CFOs said that there is high credit availability at cheaper cost versus 28% of the CFOs reported high credit availability at cheaper cost in the last year survey.

Industry expectations

Technology integration/ up-gradation (23%) and analytics solutions (17%) continue to dominate the CFOs agenda due to the increasing importance of technology and analytics for decision making and strategy of the organization.

Business focus and risks

The key focus area for 44% of the CFOs is current geographies in lieu of entering new markets; of which more than 50% CFOs are from Energy, Manufacturing, Technology, Media and Telecommunication sectors.
In terms of external risks, 19% of the CFOs believe regulatory impediments and 14% of the CFOs believe uncertainty in tax environment are the two major external risks faced by companies currently as a result of changing regulations and policies. 
On the other hand 15% CFOs shared their concern for execution against the plan/ strategy; whereas 15% CFOs are concerned about cost and productivity improvements with respect to internal risks.

Current finance priorities

Compliance to the changing regulatory environment transpires as the top most priority for the CFOs. While 69% CFOs responding that is a near-term priority, 61% CFOs state that internal control and streamlining is their near-term priority.

Deloitte India CFO Survey 2017 highlights the stance of CFOs in India on various facets of the Indian economy, investment climate, industry expectations and CFOs’ role and readiness. It brings together a multidisciplinary team of Deloitte leaders and subject matter specialists to help CFOs stay ahead in the face of growing challenges and demands.

To access the complete CFO Survey report, please click here.

Notes to the editor for reference purposes only:

This press release has been issued by Deloitte Touche Tohmatsu India LLP.

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Deloitte India herein refers to Deloitte Touche Tohmatsu India LLP.

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