Nearly two-thirds of Indian CEOs "very confident" of growth in next 12 months, 34 percent say recovery now underway or will start by year's end
South Asia, US, China Top Turnaround Markets, PricewaterhouseCoopers Study FindsDelhi -- 5 NOV 2009 -- Most CEOs in India remain confident about the prospects for business over the next 12 months, and more than a third believe the country's economy has either already begun to turn around or will do so before the end of the year, according to a survey by PricewaterhouseCoopers.
Overall, 63 per cent of Indian CEOs said they were "very confident" of their revenue growth prospects over the next 12 months and another 34 per cent were "somewhat confident." CEO confidence levels in India were nearly on a par with last year, when 70 per cent were "very confident." The survey results, which are included in the World Economic Forum (WEF) India Competitiveness Review 2009, were released today at the WEF India Economic Summit 2009 in New Dehli.
According to the survey, CEOs in India expect growth to come primarily from better penetration of existing markets, with 58 per cent citing that as their primary opportunity. Other significant growth factors included new product development, cited by 19 per cent, and new geographic markets, 10 per cent. Most Indian companies said they would be able to achieve growth organically; just 8 per cent said mergers and acquisitions would contribute to growth and just 3 per cent forecast growth from new joint ventures or strategic alliances.
With the economic recovery, Indian executives expect their most important external markets to be South Asia, cited by 18 per cent and China and the United States, both at 16 per cent. The results reflect a 10-year trend in which exports from India to South Asia, China and the Middle East have increased, while those to the US and Europe have declined.
"CEOs in India are becoming more confident in their ability to achieve equal footing with their colleagues in more developed economies. The ability of the Indian economy to recover quickly from the global downturn is evidence of its resilience and diversity and a signal of continued success and growth in coming years," said Jairaj Purandare, leader Markets & Industries, PricewaterhouseCoopers, India.
"Many Indian CEOs believe the country's manufacturing sector has become increasingly competitive and the economy is shifting away from its reliance on the services sector, a path that could take advantage of the broad spectrum of the nation's labour force," Mr Purandare, added.
Competitiveness
Indian CEOs expect their toughest competition in global markets during the recovery to come from China, cited by 34 per cent, and the European Union, 15 per cent. The US was named by only 6 per cent while the other "BRIC" countries, Brazil and Russia, were not mentioned.
Overall, 42 per cent of Indian CEOs said the country's manufacturing sector is becoming more competitive, while only 27 per cent said the country's services sector had improved its global competitiveness. The main contributors to India’s competitiveness are its supply of educated and healthy workers, mentioned by 74 per cent of respondents, its strong entrepreneurial base, cited by 56 per cent, and its technological readiness, 47 per cent.
Many Risks Remain
Among the risks associated with the economic crisis, Indian CEOs are most concerned about exchange rate volatility in the rupee, cited by 82 per cent, a protracted global recession, 79 per cent, and over-regulation, 74 per cent. Other risks included a lack of stability in capital markets, protectionist tendencies by national governments, inflation and financially-stressed suppliers.
Among risks not directly related to the financial crisis, terrorism ranked highest at 76 per cent, followed by inadequacy of basic infrastructure, 74 per cent, and energy costs, 73 per cent.
In response to these concerns, CEOs said they are planning changes to how they manage risk, particularly in the areas of how they interact with their boards of directors, 84 per cent, organisational structure, 85 per cent, managing people, 89 per cent, and corporate reputation, 79 per cent.
Said Mr Purandare, "As India grows more innovative and competitive, the country's CEOs have good reason to be optimistic. But they are also realistic about India's needs. They understand that there are difficulties, but believe the country remains on a course to sustainable growth."
Survey Methodology
For this study, 62 interviews were conducted with Indian CEOs from a range of different industries. The majority of interviews were conducted by telephone. The research was coordinated by the PricewaterhouseCoopers International Survey Unit, Belfast, Northern Ireland, in cooperation with project managers and a global advisory board of PricewaterhouseCoopers partners.
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