India Inc. is confident of achieving US$5 trillion economy: Deloitte pre-budget survey

• Research and Development, enhanced technology adoption, skilling, tax certainty, and, increased trade collaborations emerged as the key imperatives for the next five years 
• Nearly 99 percent of businesses expect AI to evolve gradually but require strong compliance for ethical practices
• About 100 percent of leaders expect the government to prioritise Environmental, Social, and Governance (ESG) strategies and initiatives

National, 23 January 2024: India Inc. is confident of achieving a US$5 trillion economy with the central government’s support in infrastructure investments, additional reforms and enhanced technology adoption. Per a CXO survey by Deloitte Touche Tohmatsu India LLP (DTTILLP), business leaders anticipate strong economic growth for the next fiscal year. About 50 percent of India Inc. reflects optimism about India posting above 6.5 percent growth in FY2025. Amongst industry sectors, automotive (50 percent), consumers and retail (66 percent), technology, media, and telecommunication (47 percent) and energy, resources and industrials (44 percent) anticipate high growth. Government initiatives, increased trade collaborations, lowering of logistics cost, and policies to increase industrial production, such as intelligent automation in manufacturing and increased investment towards sustainable technologies, will further this momentum. Changing consumer preferences and strong demand in tier-2 and tier-3 cities are other factors aiding this outlook.

India is poised to fortify its position as a global hub for innovation and research. Government support for initiatives emphasizes the pivotal role of Research and Development (R&D), such as positioning the nation as a manufacturing stronghold and advancing the semiconductor industry. As leaders anticipate significant growth in the semiconductor industry, they expect a comprehensive, long-term policy framework from the government to attract investments. 64 percent of respondents advocate for R&D support for local companies, while 57 percent underscore the significance of an effective Intellectual Property Rights framework to foster industry growth. Such strategic measures will not only attract more investments to India but also increase competitiveness in the high-technology manufacturing sectors.

AI has become the basis of modern business, offering extraordinary opportunities for growth. About 99 percent businesses expect AI to evolve and about 70 percent of consumer and retail businesses are urging government support to regulate AI use, stressing strict adherence to ethical practices in data and methods. Simultaneously, the leaders anticipate the government to prioritise the implementation of Industry 4.0 technologies (AI, ML, NLP, and computer vision) along with continuous efforts in more skill development initiatives, particularly in upskilling and nurturing talent in tier-2 and 3 cities.

To foster India’s growth, ensuring sustained business expansion and more foreign investments into the country, around 80 percent of leaders emphasized in continuity of tax certainty. The respondents also cite complete readiness for addressing geopolitical concerns and well-defined mitigation strategies. They highlight the importance of global events, such as G20 and initiatives to enable streamlining of the global supply chain.

Sharing his views on the survey findings, Sanjay Kumar, Partner, Deloitte Touche Tohmatsu India LLP, stated, “As we navigate the challenges and opportunities outlined in the survey, the vision for a digitally empowered India becomes increasingly tangible. Our survey findings reinforce the importance of innovation and collaboration in pursuing economic excellence, aligning with our national goal of a US$5 trillion-dollar economy. Together, through strategic technological advancements, we are poised to elevate the ease of doing business in the country and leave an indelible mark on the global stage."

ESG initiatives remain a priority with 100 percent respondents emphasizing the importance of renewable energy. Leaders expect the government to prioritise investing in ESG strategies and initiatives followed by technological innovations, infrastructure development, and skill enhancement. About 90 percent of businesses also want technological innovation in government processes and operations.

The survey also highlighted global headwinds and continued cost escalation concerns, which the respondents felt need strategic measures. Business leaders stress the importance of targeted skill development, aligning with the CXO survey and positioning India as an attractive, forward-thinking economy poised for sustained growth.

Key highlights:

Leaders’ outlook on India's economic growth

• About 50 percent of the leaders anticipate a 6-6.5 percent growth rate for India in FY2025, marking the third consecutive year of the fastest growth amongst major economies.
• Nearly 80 percent of the leaders in automotive, consumer and retail anticipate a growth rate above 6 percent.
• Government incentives, subsidies, and the growing adoption of technology use cases could influence India's economic growth in the upcoming fiscal year.

The industry’s groove on its growth trajectory – A rhythm of progress

• About 67 percent of the businesses agree that public-private collaboration is pivotal for industry growth.
• Despite effective execution, Production Linked Incentive scheme 2.0 has a participation rate by 15 percent respondents, signalling a need for a better approach.
• Enhanced financial instruments are crucial for growth in financial services (82 percent) and technology, media, and telecommunication (72 percent).
• Improved credit availability is one of the top three growth factors, supported by automotive (71 percent); energy, resources, and industrials, and government and public services (61 percent); and consumer and retail (56 percent).

Stepping into the limelight – Digital revolution and AI seize the lead

• More than 60 percent of businesses drive innovation in their digitalisation journey, focussing on AI and digital technologies.
• Nearly 79 percent of leaders encounter maintenance issues, a lack of technical support, and insufficient user training.
• More than 90 percent of businesses use AI/GenAI, with chatbots and virtual assistants being the most widely adopted technologies.
• Natural language processing (NLP) and large language model (LLMs) though in a nascent stage, show slow growth with less than 30 percent adoption, indicating potential future significance.
• Government and public services invest strategically, with 52 percent in computer vision and ML algorithms for niche use cases.
• Across industries, there is a strong expectation (99 percent) for AI evolution, stressing the need for robust compliance with ethical practices.

Business buzz on the upcoming budget in July 2024

• About 13 percent businesses hold a negative outlook on the upcoming July 2024 budget, indicating a significant increase from 1 percent reported in 2023.
• More than 70 percent of the large businesses express optimism, while only 45 percent share the same sentiment.
• The higher negative outlook is due to escalating inflation concerns and anticipated political transition.
• The automotive, consumer and retail sectors are optimistic, while caution prevails in the government, public services, life sciences, and healthcare sectors.

Government’s key focus areas for the next fiscal year

• About 100 percent of leaders expect the government to prioritise ESG strategies and initiatives.
• Nearly 90 percent of businesses anticipate the government to focus on technological innovation, including the digital transformation of government processes and functions.
• Close to 81 percent of leaders believe that the government should prioritise infrastructure development modernisation.
• About 81 percent of leaders advocate for augmented efforts in skill development initiatives.
• Nearly 57 percent of leaders call for a shift towards digital healthcare.
• About 50 percent of leaders desire to implement the National Education Policy.

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About the FY2024 Survey:

The survey offers a comprehensive snapshot of the business community's outlook, providing valuable insights into their expectations, concerns, and advocacy areas for policy improvements. With 230 responses from CXOs across industries, it offers a detailed analysis of critical factors influencing the economic landscape across various dimensions and growth factors. It delved into industry leaders’ perceptions concerning pivotal growth elements, such as market conditions, government policies, and global economic trends, providing essential insights for gauging the overall confidence and expectations within the business community.

Notes to the editor for reference purposes only:

This press release has been issued by Deloitte Touche Tohmatsu India LLP. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms.