India's manufacturing companies are looking for a financial booster dose to revive major job generating sectors like metals and mining, power, cement, automobiles, petroleum, real estate and infrastructure. An industrialist says that manufacturing industry alone will require at least Rs 5 lakh crore immediately to get out of this crisis.
Prime Minister Narendra Modi has announced an economic package of Rs 20 lakh crore for fighting the economic impact of the novel coronavirus pandemic. He said the government is working on a package "Atma Nirbhar Bharat Abhiyan" for economic revival.
"What manufacturing industry wants now is a comprehensive package, which includes tax holidays, export assistance and low cost capital. It will help in attracting foreign investments as well as boosting 'Make in India', which is yet to take shape," said an executive with an infrastructure company.
Capital is a big issue for manufacturing companies as Indian banks are conservative, despite providing costly capital compared to the rest of the world, said an industry expert. "Companies will not borrow high cost capital to meet fixed costs like salaries. If companies don't provide jobs and pay proper salaries, the recovery from this crisis will be difficult for the country," he said.
Some big companies are good in finding active markets abroad. But small and medium the companies are finding it difficult to locate global buyers. Another demand of a tax holiday, which helped the IT industry to flourish in India in the '90s is expected to attract more investments in manufacturing and infrastructure industries.
"If government tries to club the earlier budgeted projects in a different bucket, the real recovery will be a myth in the near term," another executive said. PM Modi reiterated that the package will spur business, attract investment and strengthen Make in India Mission.
Most corporate houses are in the process of suspending their capital expenditure plans for this fiscal. It is a growing concern for industry. The problem that automobile and real estate industries face is the lack of customers. The companies will not be able to make fresh investments at a time when there is no market. The government should take steps to revive customer confidence also.
"Income tax exemptions, allocation of capital for minimum job guarantee and rural development schemes and enhancing minimum support price of agricultural produce are important to strengthen customer confidence," said chief financial officer of a steel company.