The global geo-economic developments currently underway have led to anxiety amongst members of the Indian industry. Yet, these developments have not broken the spirit of private enterprise, as two out of three industry members expressed moderate confidence in their organisation’s ability to manage the evolving risks, according to a recent FICCI Survey on Global Risks & Opportunities.
As many as 57 per cent of respondents identified supply chain breakdowns as a pressing risk, and 53 per cent highlighted trade fragmentation or protectionist measures as an area of concern. As many as 58 per cent ranked export operations as the business function most vulnerable to such shocks.
The Survey is based on the views of 100 respondents from a smorgasbord of 18 industrial and service segments. The large, middle, and small-sized companies were almost equally represented in the Survey.
Even as members of India Inc. grapple with trade-related developments at the global level, they are also keeping a close eye on climate-related changes. Our survey shows that a large majority (74 per cent) expects climate change to drive higher operational costs, and 67 per cent foresee tighter environmental rules. Preparedness for the EU’s Carbon Border Adjustment Mechanism (CBAM) and similar regulations is low; only 20 per cent report being fully ready, while 55 per cent are partially prepared.
It is interesting and exhilarating, though, to find that more than half of the respondents expressed confidence in the strength and resilience of India’s manufacturing sector. In the next five years, 51 per cent of respondents believe that India can emerge as a global leader in manufacturing; for IT, it was 47 per cent, for defence and aerospace, 47 per cent, renewable energy (44 per cent), and AI & machine learning (41 per cent).
Articulating the mood of Indian businesses, FICCI President Harsha Vardhan Agarwal recently said, “India has in the past faced multiple challenges and we have, through our collective resolve, turned adversity into opportunity. It is time that we once again focus all our energies on further strengthening our industrial economy and the services sector. This is the time to take ahead transformative reforms both at the Central and state level.”
Another positive that emerges is that businesses see AI as an opportunity rather than a threat. Four in five (79 per cent) expect it to boost automation and efficiency, 62 per cent predict better decision-making capabilities, and 45 per cent see developments around AI leading to the creation of new business opportunities and markets. Even as companies acknowledge the opportunities that AI may offer, 55 per cent highlighted the urgent need for workforce up-skilling to harness these technologies effectively.
Also, almost two-thirds (65 per cent) of businesses have expressed moderate confidence in their ability to manage geopolitical risks. Yet, 85 per cent expect global trade policy and regulatory changes to have a mild or significant impact on operations over the next two years. Commodity pricing is seen as a challenge both in terms of increases and volatility. All this has had a dampening effect on investment sentiment, as 36 per cent of respondents reassess plans for the next six months.
The Survey reflects a change not only in the magnitude but also in the type of risks. One-third of respondents see global challenges as more severe than domestic ones, while 30 per cent consider them qualitatively different. Over half (56 per cent) believe that today’s risks are fundamentally different from those experienced during the COVID-19 pandemic, shifting from health-related disruptions to geopolitical, trade, and supply chain vulnerabilities.
It is also noteworthy that energy prices are not perceived as a significant risk, as only one in ten respondents regards them as such—similarly, only 10 per cent view political instability as a risk.
The size of a business has some impact on its confidence level in managing risks. While 73 per cent of large business respondents express moderate confidence in their ability to manage geopolitical risks, 27 per cent claim extreme confidence. The corresponding proportions for mid-sized firms are 54 per cent and 38 per cent. Among the small-sized respondents, 70 per cent are moderately confident, while around 10 per cent were not confident. “The limited global exposure of smaller firms may be a reason why the majority of these firms have some confidence in managing the global risks,” the Survey says.
Amidst rising global and geopolitical risks, Indian businesses are adopting diverse strategies to enhance their resilience. Market diversification is the leading trend, with 52 per cent of respondents opting for it, followed by restructuring and a domestic focus (36 per cent each), cost-cutting (31 per cent), and product diversification (30 per cent). Technology investment (29 per cent) and supply chain resilience (28 per cent) signal future-proofing efforts.
According to the FICCI Survey, businesses seek government-to-government trade facilitation (60 per cent), strategic foresight (50 per cent), and industry collaborations (42 per cent) as top support measures. Overall, a coordinated approach that blends public-private partnerships, intelligence sharing, and capacity building is viewed as essential to navigating global volatility and sustaining competitiveness.
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