Indian companies have rejected concerns of an imminent slowdown in the economy as borne out by the industrial production, which grew 3 per cent in March, the slowest since 2002.
The dip in industrial production has been described as not a cause for worry as this figure is based against the high growth of 14.8 per cent in March last year.
"Though the growth in consumption of consumer goods has been low throughout the year, the growth in investments made by companies to expand their business continues," said Y M Deosthalee, chief financial officer, Larsen & Toubro.
"Consumption would follow the investments being made by the companies. It would not be right to draw conclusions on one month's data."
Textiles manufacturers, who are already under pressure because of rising oil prices and a slowdown in the US and global economy, have expressed concern over the industrial production figures, but expect demand to pick up later.
"In the next 8-10 months we see the textile sector coming up, as fundamentally our economy is strong and we have had a good cotton crop," said R K Dalmia, president, Century Textiles Limited.
The electronics sector -- including television manufacturers -- which has experienced a marginal growth, also expects demand to continue.
"I don't see any underlying demand slowdown for the consumer durables sector, said V Ramachandran, director (sales and marketing) LG Electronics India.
The expectation of growth was also pinned by expectation of depreciating currency. Indian rupee touched a low of 42 rupees to a dollar at the close in the day on demand for currency from oil companies.
"The rupee has shown some depreciation in recent times. If it sustains then we can have some positive impact," said Rajul Mehta, president, Clothing Manufacturers Association of India.
However, companies hope the government and the Reserve Bank of India will lower interest rates to help boost demand and growth.
The central bank last month twice raised the Cash Reserve Ratio towards stemming inflation that is running at a three-year high. The CRR was raised to 8.25 per cent in the monetary policy announced on April 30.
"One would like to see the interest rates at lower levels as it increases the cost everywhere," said Pervez Umrigar, managing director, Gammon India.
Borrowing costs, at nearly six-year highs are discouraging consumers to borrow and spend on cars, motorcycles and other products. Car sales have risen 12 per cent in the year compared with a 22 per cent rise in the earlier period.
"We have noticed a slight demand slowdown in the replacement market in commercial vehicle tyres, especially radial tyres," said Sunam Sarkar, chief of corporate strategy & marketing at Apollo Tyres.
Companies also want the government to tackle issues of infrastructure bottleneck that is hampering growth and the expansion of industry in critical areas.
"The government needs to address infrastructure bottlenecks on a war-footing. It must encourage more private-public partnerships to accelerate infrastructure creation," Sarkar said.
