NEW DELHI: Chief executives of Indian companies have slowed down investment plans for 2012 because of problems with land availability, power costs, environmental hurdles and cost of capital, a survey by the Confederation of Indian Industry showed.
Other issues that influenced the outlook include governance, discretionary power, corruption and problems of infrastructure, labour reforms and taxation, but the majority of respondents felt that the New Manufacturing Policy announced recently is likely to improve the investment environment, CII said. Companies would slow down both domestic and international investments, the survey showed.
"It is worrying to note that a majority of CEOs have muted investment plans both in India and abroad, reflecting the difficult environment for investments," said Chandrajit Banerjee, CII's director general. The survey revealed that only a third of the respondents expected domestic investments to increase by more than 10% in 2012 while the rest expect an increase of less than 10% or a decline.
Similarly, 32.1% of respondents expect international investments to increase by more than 10% while the rest forecast a lower increase or a decline. On the issue of the impact of the problems in the Europe on the Indian economy, more than half the respondents (60.6%) rated it as moderate while 33.3% said it was high and 6.1% felt it was low.
Over 80% of them felt that the sluggishness in the Western world and growing uncertainty and risk averseness is likely to have a moderating impact on India's exports, FDI, FII inflows and External Commercial Borrowings. The outlook with regard to PE investments was relatively less pessimistic with 76% expecting moderation.
When asked whether India should contribute to the Eurozone's bailout fund, 70.6% of the respondents said no. When asked whether the trend of Indian companies investing abroad would strengthen despite the global economic turmoil, 44.1% of respondents said yes while 35.3% said no and the rest said it was uncertain.
Respondents revealed some of the countries and sectors where they are looking for international acquisitions or investments.
Countries include Malaysia, Singapore, Indonesia, USA, Canada, Brazil, UK, Germany, Sweden, Austria, Nigeria, Sub-Saharan Africa, Russia, Italy, Vietnam, Argentina and Ukraine and sectors varied from auto components, automobiles, bio manufacturing, financial services, it services, coal, solar power, health and chemicals.
Nearly 79% of the respondent said the reason for investing abroad was more the "pull factor", or the desire to increase global footprint or to get access to natural resources, not the push factor, which is lack of opportunities and infrastructure bottlenecks at home.
Source : economictimes.indiatimes.com