80% of Indian firms hold positive outlook for economy: Grant Thornton

Around 80% of Indian mid-market businesses maintain a positive economic outlook in the next 12 months, up from 78% in the first half of 2023, according to a survey by Grant Thornton.

While India flourishes, confidence in their respective country's economic outlook declined from 67% in H1 2023 to 66% in H2 for the Asia-Pacific (APAC) region, the survey conducted in the latter half of 2023 shows.

India is currently the fastest-growing G20 economy and the fifth-largest economy globally. India aspires to be a developed economy by 2047.

"India remains the clear large economy outlier despite the global downturn in business optimism amongst international mid-market businesses (67% in H1 2023 to 65% in H2 2023), per Grant Thornton's International Business Report (IBR). These trends align with projections of India being the major contributor of this decade's absolute global growth," says Vishesh C Chandiok, chief executive officer, Grant Thornton Bharat.

Buoyed by the heightened optimism in India, sectors such as automotive, infrastructure and consumer goods have grown significantly compared to the last year and have a promising outlook. The construction sector is projected to reach $1.42 trillion by 2027, expanding at a CAGR of 17.26% during 2022-27. The fast-moving consumer goods (FMCG) sector is expected to grow at a CAGR of 27.9% during 2021-27 to reach nearly $615.87 billion. India's automotive sector, which is the third-largest globally, is projected to double in size to ₹15 lakh crore by the end of 2024.

Upbeat forecasts for profit and revenue

About 83% of Indian mid-market companies foresee an increase in profitability over the next 12 months, a significant jump from 76% in late 2022, the survey shows. This high level of confidence was last seen in Q4 2016, when 88% of companies expected profit growth, reflecting a strong belief in Indian businesses' resilience and adaptability despite global challenges.

"The bullish outlook extends beyond just profit expectations. 83% of Indian mid-market companies expect growth in revenue in the coming year, as India's expansive domestic market offers lucrative opportunities for expansion," says Siddhartha Nigam, partner and national global delivery leader, Grant Thornton Bharat.

"Government initiatives such as 'Make in India', improvements in the ease of doing business, and the ongoing digital transformation have created a favourable environment for corporates. This revenue growth is likely to create more jobs, particularly in mid-market companies, as 78% of them anticipate a surge in employment this year, surpassing the global average of 51%," Nigam says.

Mid-market companies anticipate a surge in employment, with 78% in India projecting an increase this year, surpassing the global average of 51%. In the Emerging APAC region, only 49% expect an increase, while in Developed APAC and the European Union (EU), the figures are 41% and 39%, respectively.

There is also a notable shift towards integrating advanced technologies, particularly artificial intelligence (AI), with a staggering 72% of Indian mid-market leaders foreseeing a surge in technology investments to leverage AI's potential. However, amidst this technological evolution, 44% acknowledge the potential increase in the cost of upskilling people due to AI, suggesting the need for strategic planning during this transition. 58% believe AI will drive innovation in products and services to differentiate themselves in the market and exceed customer expectations. This reflects a clear recognition of the role AI plays in driving growth, the report says.