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Euro zone troubles impact India Inc, says Ficci survey

Posted on September 11, 2012
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Companies doing business in Europe are feeling the pinch of the crisis in the Euro zone, shows a survey conducted by the Federation of Indian Chambers of Commerce and Industry (Ficci).

Europe is the largest trading partner of India, absorbing as much as 20 per cent of India’s outbound shipments. And, 73 per cent of Indian companies doing business in Europe said they’d already suffered a loss of 20 per cent or more in their businesses from the region since the beginning of the crisis.

The survey, of 30 companies, sought to check the impact on Indian industry of the economic survey there.

Eighteen per cent of the respondents said there was a five to 10 per cent decline in their businesses. As many as 60 per cent of the surveyed companies expected the current economic situation to persist for the next two to three years, Ficci said. However, a fifth of the respondents expressed optimism that the economic situation in the European Union would begin to look up in a year.

The survey showed a little over half of the Indian companies had begun to look beyond Europe to keep their balance sheets stable. “These companies have begun to gradually look for greener pastures in African countries, west Asia, south Asia and even in north America,” said Ficci.

About 13 per cent of the respondents said rather than facilitating foreign investments and businesses, the respective European governments have made processes more stringent in getting and renewing long-term visas and work permits. Getting a business visa remains a worrying issue for the companies surveyed to effectively engage the European economies.

About a tenth of the respondents suggested the Indian government could favourably look at providing subsidies and lower duties for promoting India-EU trade.

Among the positive developments, Indian manufacturers are aggressively pursuing new business plans. This includes more import of high-end machinery and technology from Europe due to highly competitive prices being offered by European exporters.

This could have long-term spin-offs for Indian industry, in terms of added capacities and reduced capital expenditures.

The chamber said India’s outbound investments in the EU might see smaller deals but the activity would continue.

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