India still fourth-most attractive market, shows PwC Global CEO survey

But confidence in global economic growth reached lowest levels since 2008 financial crash

As confidence in the global economy reaches a 10-year low, India has managed to retain the position of the fourth-most attractive market, shows a survey of Chief Executive Officers (CEOs) from across the world by consultancy giant PwC.

Released on Monday, the 23rd Pwc CEO Survey showed that as many as 53 per cent of global CEOs believe international economic growth would decline in the next 12 months. The findings are the worst since the financial crash of 2007-08, with only 29 per cent of CEOs expressing pessimism in the global economy in the 2019 survey. In the year before, only 5 per cent of CEOs believed growth would dip.

However, 9 per cent of CEOs believe India remains among the most important regions for the growth of their organisations. The level of importance attached to India by global corporate leaders has hovered around the same levels for the past three years. While the 2019 survey showed 8 per cent of CEOs favoured the country, the figure was 9 per cent in the year ago.

Released on the first day of the World Economic Forum annual meeting, the report surveyed more than 1,580 CEOs in 83 countries. It noted that despite a protracted and costly trade war with the US, China has regained popularity among business leaders, remaining the second-most attractive region. Both countries saw their attractiveness rise after falling sharply in 2019.

Indian corporate leaders had an equally bleak outlook on the global scenario, with 52 per cent of those surveyed saying growth would decline, up from only 27 per cent a year ago. More than half of the 63 CEOs interviewed by PwC in India attributed their pessimism to uncertain economic growth. 

India’s gross domestic product growth in 2019-20 is expected at 5 per cent, compared to 6.8 per cent in year-ago period, according to the first Advance Estimates released by the statistics ministry earlier this month. This was mostly due to a slowdown in the manufacturing sector, which is expected to grow 2 per cent in the current financial year, down from 6.9 per cent in the previous year.

 

Hinting that the decline in manufacturing growth may not be a simple cyclical issue of demand and supply, the PwC report pointed out that 40 per cent of Indian CEOs are seriously concerned about the speed of technological change. 

Successive Economic Surveys have pointed out that India may miss the bus on new-age manufacturing if sustained innovation is not brought in immediately. But the government’s cornerstone policy to initiate reforms — the new industrial policy that plans to promote robotics, artificial intelligence and new technologies like 3D printing — has missed several deadlines.

Policy uncertainty was the third-biggest fear among India Inc, with 38 per cent of surveyed individuals seriously concerned with overregulation. Trade protectionism in both domestic and global market stood just after that at 37 per cent. 

The government had raised import duties more than 8x since 2018, placing restrictions on thousands of items. Now, the commerce department plans to bring in restrictions for ‘other’ category of imports, effectively unknown imports that plan $127 billion worth of inbound trade. Imports have fallen 7x in 2019-20.

Thirty-five per cent of Indian CEOs claimed cyberthreats were a serious concern. A similar percentage of Indian business leaders said the government was failing to design privacy regulations that increase consumer trust as well as maintain business competitiveness.

India trailed most other major economies in embracing climate change opportunities, with only 17 per cent of CEOs believing that climate change will lead to significant new product and service. In contrast, 47 per cent of Chinese CEOs agreed to the idea.

On the other hand, only 11 per cent of India CEOs believe their organisation has made ‘significant progress’ in establishing an upskilling programme that develops a mix of soft, technical, and digital skills.