UK exporters could bask in India Summer says Coface
Grant Williams, Risk Underwriting Director, Coface in the UK and Ireland said: "While there has been a slowdown in India's rapid growth in recent years and sectors such as steel, minerals and textiles represent a higher risk, our report shows that there are still lower risk areas such as the drinks industry, technology and services."
"The UK Government has said that it wants to double trade with India from its 2010 level by 2015 and we hope that this report helps businesses to focus on the most promising opportunities. From a UK perspective it's also good news that Indian businesses have strengthened their credit control procedures as all too often bad debt has a domino effect along the supply chain."
The survey revealed:
- More than 80% of businesses interviewed believed India would avoid going into recession.
- 97% had implemented credit management procedures in the last four years, compared to 82% in 2008. Most relied on market information and site visits to research potential customers.
- The number of businesses willing to offer credit terms to domestic trading partners increased to 45% in 2011, from a low of 38% in 2010.
- 32% felt that late payments had declined. 51% reported that payments which were more than 6 months overdue represented less than 2% of their annual turnover and 17% claimed it was below 0.5% of annual turnover.
- Late payments of more than 60 days were most common in the transportation sector (48%) during 2011, followed by the electronic appliances' sector (46%), although these figures represent a small improvement on the previous year.
- Coface has given India a country assessment of A3 (the average probability of default is satisfactory) and a business climate assessment of A4 (the business climate is acceptable but can be difficult).
It concludes that India's strengths are diverse growth drivers; high savings and investment rates; a competitive private sector and a moderate foreign debt. Weaknesses include a lack of infrastructure and deficient education system; a rise in skilled labour wages which threatens competitiveness; increasing private corporate debt; and weak public finances.