India Inc. largely optimistic about GDP growing over 6.5 percent

• About 60 percent of those surveyed confident about India growing above 6.5 percent in FY’23
• 73 percent respondents hope the budget will fuel growth across industries by building strong domestic demand and focussing on capital expenditure
• 90 percent respondents commend the Atmanirbhar Bharat Scheme, with an overwhelming response from the electronics manufacturing, energy, and food processing sectors, expecting it to develop stronger supply-chain channels
• More than 70 percent respondents agree that various Production Linked Incentives (PLI) schemes have been beneficial for the growth of their sector, with close to 60 percent respondents expecting an extension of the incentive in the coming years

National, 13 January 2023 – Business leaders in India are confident that Budget 2023-24 will help fuel economic growth across sectors and industries, amidst a potential global slowdown and geopolitical instability.

About 60 percent of India Inc. surveyed is optimistic about India posting above 6.5 percent growth during this period. Amongst industry sectors, chemicals (72 percent), capital goods (70 percent), and energy (67 percent) expressed confidence in growth being high, and felt that government initiatives, such as Atmanirbhar Bharat, PLI, and favourable monetary policies by RBI (to moderate retail inflation and maintain significant forex), increased spending on infrastructure, and research and innovation, will further this momentum.

Business leaders who responded to the pre-budget survey by Deloitte Touche Tohmatsu India LLP (DTTILLP) believe that the budget would define the “Amrit Kaal” agenda for India and fuel the economy to remain resilient and continue to grow at a healthy pace, while balancing concerns around inflation and global risks.

Critical to this growth will be the pace of capital expenditure, infrastructure development, and the need to boost infrastructure financing through private partnership. Sixty percent respondents suggested raising funds through Indian Government Bonds. This proportion has increased by 12 percent from the previous year’s survey. Fifty-eight percent respondents suggest that public-private partnership (PPP) should be encouraged to meet the funding gap and address issues that deter private participation, while bringing in innovative structures such as credit guarantee enhancement.

As global uncertainties and an economic slowdown loom across geographies, tax-related changes are expected to boost industry growth and are the most sought-after measures from the upcoming Union Budget. An overwhelming majority of respondents see trade treaties as vehicles for increasing investment flows and providing exchange of emerging technologies to strengthen their role in global value chains (GVCs). Inclusion of MSMEs in the GVC will bring in sustainability to industrial growth and improve trade flows, and strengthen their role in GVCs.

Besides easing tax compliance, 45 percent respondents anticipate the government to reduce tax litigation, while 44 percent expect to gain clarification of tax laws and provisions such as TDS under section 194-O. Additionally, the industry is expecting the simplification of the capital gains tax structure and removal of ambiguities in the interpretation of tax, thereby making compliance easier. These will not only spur investment and economic growth, but also provide long-term relief to taxpayers and the tax administration.

Sharing his views on the survey findings, Sanjay Kumar, Partner, Deloitte Touche Tohmatsu India LLP, said, “Despite global uncertainties, the Indian economy has been resilient and is well on its way to a growth rate of 7 percent. With the vision of attaining a US$5 trillion economy, the government has adopted a focussed approach towards ease of doing business and enhancing industrial growth, generating employment, and increasing investments. Union Budget 2023-24 holds great expectations from the industry to continue this momentum and lead the country towards economic prosperity.”

“Industry players are optimistic about the upcoming budget and expect a slew of measures for economic growth, with a strategic focus on infrastructure development, boosting exports, easing compliances, and leading the nation towards carbon neutrality, in line with R.A.I.S.E, as enshrined in G20/B20.” he added.

According to the survey, about 70 percent respondents commended the Production Linked Incentives (PLI) schemes for beneficial growth in their sectors. Further, 60 respondents advocated that extending these incentives for the coming years would facilitate and increase their production capacity. The expectation to extend the PLI scheme was the highest amongst respondents from the food processing and telecommunications and technology sectors.

Key highlights:

Economic outlook growth in India

• 73 percent respondents are optimistic that the forthcoming budget would help their industry grow
• 62 percent respondents are confident that the economy will grow to above 6.5 percent, fuelled by strong domestic demand and the government’s push for capital expenditure

Role of digitalisation

• Almost 60 percent respondents believe that the recent push towards digitalisation has been advantageous for the sector, with 70 percent respondents indicating the GST portal to be the most effective digital endeavour by the government

Increasing industry demand

• Almost half of the respondents stated that additional tax incentives may spur growth in their respective industries. This is a big ask for more than 60 percent of BFSI, food processing, and energy leaders
• Having accelerated credit support can also stimulate economic growth, as stated by 40 percent industry leaders. Telecom (50 percent) and textile (53 percent) industry leaders also underscored this
  

Atmanirbhar Bharat and PLI

• Respondents indicated that strengthening supply chains and lowering administrative inefficiencies and compliance burdens will further improve the programme's efficacy
• 59 percent respondents advocate that prolonging Production Linked Incentives for additional years would increase their production capacity; 71 percent leaders from food processing and 70 percent leaders from telecom and technology concurred on this sentiment

Capitalising on making India the digital powerhouse

• 56 percent respondents feel that aggressively collaborating with the private sector to create and complete digital projects will boost digitisation efforts
• Increased focus on R&D as well as private-sector engagement in R&D funding will transform India into a digital powerhouse

Financing capital investment

• 60 percent respondents advise using Indian government bonds to raise money. This percentage has risen from the previous year by 12 percent
• 58 percent respondents believe that promoting PPP through efforts to resolve disputes and risk management for private participants may be utilised to inject funds into the economy

Boosting exports

• Increased PLI coverage is considered by 56 percent respondents as the most effective strategy for boosting industrial exports. This was also supported by 72 percent leaders from the chemical sector and 80 percent leaders in the textile industry

Capitalising on the slowdown in manufacturing economies

• Making import tariffs competitive, according to 60 percent respondents, might help the country seize opportunities in the global market, while the world's key industrial economies slow down

Facilitating ESG adoption

• Tax incentives (noted by 64 percent leaders) and the formation of capital markets (50 percent respondents) would assist in ESG adoption

Expectations from a taxation perspective

• More than 65 percent respondents stated the most beneficial direct tax-related reform would be to make tax compliance easier
• Rationalising tax rates across the assets and gains indexation is rated as being extremely advantageous by 55 percent respondents
• 70 percent respondents think modifying personal taxation would support individuals
• Over 60 percent anticipate an increase in tax exemption and deduction limits
• 75 percent respondents support group taxation and want it to be put into effect within a year

About the FY’23 pre-budget survey:

The survey aimed to analyse the industry’s expectations from the upcoming budget, from the standpoint of economic growth, ESG adoption, trade agreements, and exports. Online surveys with CXOs across industries and categories of companies were conducted. A total of 181 responses were collated from the survey, across 10 industries. The survey contained a set of 27 questions pertaining to the economic outlook, budget projections, corporate and personal taxation changes, and the effectiveness of various digital initiatives introduced during the past year.

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.