New Delhi: Business confidence in India declined in July-September after improving for three consecutive quarters, owing to factors including an additional 25% tariff imposed on India by the US amid a volatile geopolitical environment, according to a survey conducted by the National Council of Applied Economic Research (NCAER).
The Business Confidence Index declined to 142.6 in the second quarter of this financial year from 149.4 in the preceding three months. However, it remained higher than 134.3 in the year-ago period.
"The quarter was also marked by GST (goods and services tax) reforms and reduction of tax rates whose effect is expected to be felt over the remaining two quarters," said a report based on the survey, released on Monday.
India has been hit with a 50% tariff by the US, among the highest globally, including a 25% penalty for purchasing Russian oil.
According to the survey, 82% of firms expected production to increase over the next six months compared to 79% in the previous quarter, with 44% expecting the increase to be between 0-5%.
Similarly, 73% of firms expected exports of final products to increase compared with 67% in the previous quarter, with 47% expecting a 0-5% increase. "The components dealing with macro sentiments were relatively more negatively affected, while the impact was mixed for sentiments at the micro level," said Bornali Bhandari, a professor at the NCAER.
The Business Confidence Index is based on four indicators: 'overall economic conditions to improve in next six months'; 'financial position of the firms will improve in next six months'; 'present investment climate'; and 'whether present capacity utilisation was close to or above optimal level'.
"Overall, the share of positive responses remained above 50% in the second quarter for all four components, signalling a relatively slower growth momentum," said the report. The survey covered 484 companies across six cities. Business sentiment regarding pre-tax profit growth fell to 54% in the September quarter from 61% in April-June.
The Business Confidence Index for micro, small and medium enterprises or MSMEs (annual turnover of up to ₹100 crore) rose slightly to 138 in the September quarter from 137 in April-June , while for large firms (turnover of more than ₹100 crore) fell to 149.9 from 171.6. Only 32% of MSMEs were exporters compared to 62% of large firms, indicating larger firms were hit harder by global uncertainties.
The Business Confidence Index declined to 142.6 in the second quarter of this financial year from 149.4 in the preceding three months. However, it remained higher than 134.3 in the year-ago period.
"The quarter was also marked by GST (goods and services tax) reforms and reduction of tax rates whose effect is expected to be felt over the remaining two quarters," said a report based on the survey, released on Monday.
India has been hit with a 50% tariff by the US, among the highest globally, including a 25% penalty for purchasing Russian oil.
According to the survey, 82% of firms expected production to increase over the next six months compared to 79% in the previous quarter, with 44% expecting the increase to be between 0-5%.
Similarly, 73% of firms expected exports of final products to increase compared with 67% in the previous quarter, with 47% expecting a 0-5% increase. "The components dealing with macro sentiments were relatively more negatively affected, while the impact was mixed for sentiments at the micro level," said Bornali Bhandari, a professor at the NCAER.
The Business Confidence Index is based on four indicators: 'overall economic conditions to improve in next six months'; 'financial position of the firms will improve in next six months'; 'present investment climate'; and 'whether present capacity utilisation was close to or above optimal level'.
"Overall, the share of positive responses remained above 50% in the second quarter for all four components, signalling a relatively slower growth momentum," said the report. The survey covered 484 companies across six cities. Business sentiment regarding pre-tax profit growth fell to 54% in the September quarter from 61% in April-June.
The Business Confidence Index for micro, small and medium enterprises or MSMEs (annual turnover of up to ₹100 crore) rose slightly to 138 in the September quarter from 137 in April-June , while for large firms (turnover of more than ₹100 crore) fell to 149.9 from 171.6. Only 32% of MSMEs were exporters compared to 62% of large firms, indicating larger firms were hit harder by global uncertainties.