(New Delhi, January 20, 2022): Indian businesses saw spending grow three times faster than the expectations from its comparable peers in the other countries, establishing a lead that is likely to only consolidate. Total B2B spend for India grew by 9.4 percent in Q3 2021 on year-on-year basis and is expected to rise by 10.3 percent in 2022. The report shows that the India spending is on the rise across nine key B2B categories. These findings were revealed in the India Business Spend Indicator (IBSI) report launched by American Express, India and Invest India in partnership with the Centre for Business and Economic Research (CEBR).
The report indicates bullishness and greater confidence with 74 percent of businesses expecting to spend more on technology and 72 percent planning to make more capital investments in 2022. It also revealed other trends like 59 percent of B2B sellers consider the main benefit of digital payments to be the speed of payment and ability to track spends. 83 percent of eligible respondents said that the Government’s ‘Make in India’ campaign has helped their business. 59 percent large, 57 percent small scale companies, 53 percent medium scale companies and 42 percent micro-scale companies which planned on increasing technology spend in Q4 2021 are doing so to improve productivity.
Mr. Manoj Adlakha, SVP and CEO, American Express Banking Corp., India said, “India saw the highest B2B spending growth compared to expectations of six other major economies. This year, the total B2B spend for India is expected to rise by 10.3 percent compared to 2021”. He further added, “This shows that the Indian economy is very much in its bounce-back phase from the economic difficulties caused by the pandemic crisis. The survey also reveals that some of the trends that have emerged or accelerated during the pandemic such as payments automation and new approaches to manage the supply chain, are likely to stay”.
Mr. Deepak Bagla, MD and CEO, Invest India stated, “This report by American Express and Invest India attempts to facilitate understanding of the present state of B2B payments in the country and bring out businesses’ positive response to major government policies. I am confident that the insights brought out by this collaboration will offer great value to readers.”
The IBSI report, designed to capture the importance of business spending in India, is based on a survey of more than 500 small, medium, and large companies. It is similar to the Global Business Spend Indicator (GBSI) report, which was conducted in six other countries – Australia, Canada, Japan, Mexico, United Kingdom, and United States, enabling cross country comparisons of the prevailing business climate and sentiments in different geographies.
Indian businesses to spend three times more than their peers’ expectations
Indian businesses surveyed reported an 8.8 percent rise in spending in Q3 2021, which later rose to an estimated 9.3 percent in Q4 2021. The highest spending growth rates were seen for raw and processed material as businesses look to raise productivity and cost efficiency.
Technology and automation to be the key drivers for Indian businesses
71 percent of businesses are expected to spend more on technology in Q4, 2021 as compared to Q3, 2021 to improve productivity, remain operational, improve the quality of the products/services and for the speed and effectiveness of making and receiving payments. Most of the companies surveyed (38 percent) reported that they had automated their sales functions and a considerable number of companies (37 percent) had automated their accounting processes.
Indian businesses prioritize digital payments for speed and ease of use
49 percent respondents stated that an integrated digital platform that provides insights across end-to-end payments processes would be very helpful for their business. 72 percent of businesses have made B2B payments using a debit or credit card in Q3, 2021. Of these, 47 percent said they used cards for the speed of online payments while 44 percent said the ease of use and 43 percent said ability to track payments were the other factors for doing digital transactions.
Businesses benefitting from Government initiatives
The report highlights that on an average 64 percent businesses have benefitted from Government initiatives such as the Emergency Credit Line Guarantee Scheme, the RBI’s debt moratorium and export credit policy. Specifically, 72 percent of eligible businesses have benefitted from the Government’s Production Linked Incentive (PLI) scheme.
There were some challenges pointed out by the respondents where 81 percent of businesses surveyed have experienced supply chain issues and 30 percent of the businesses did not want to use an integrated digital platform because of low level of trust for digital transactions.
Commenting on the way ahead, Mr. Manoj Adlakha, SVP and CEO, American Express Banking Corp., India stated, “The progress made by Indian businesses in the economic and social spheres has been possible due to persistent reforms drive aimed at making the country’s business climate simpler and easier. Sectors like business-to-business (B2B) commerce have not only beefed up the country’s procurement and vendor processes but also steered several small and medium enterprises towards a growth path. With rapid digitisation laying the foundation for domestic and global trade and commerce, B2B payments and spending have shifted towards e-commerce and e-payments in recent times”.
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AMERICAN EXPRESS
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INDIA BUSINESS SPEND INDICATOR METHODOLGY
The India Business Spend Indicator (IBSI) leverages survey data from more than 500 companies across sole traders, micro businesses (with 2-9 employees), small businesses (with 10-49 employees), medium-sized businesses (with 50-249 employees), and large businesses (with 250+ employees) have been surveyed, providing a holistic insight into the diversity of perspectives and experiences that exist within the business population.
For this report, B2B spend is classified as goods and services that a business purchases from another business to keep their business running. Business to business (B2B) spend categories include raw or processed materials; capital investments and operating expenditure; technology; building, construction, maintenance and installation; finished goods; advertising, sales and marketing; business and professional services; utilities; financial services. Broader business spends categories include taxes and licensing; travel, entertainment and expenses; people / workforce.
The survey underpinning this edition of the IBSI was conducted by Opinium research between October 11 – 25 2021. The sample is comprised of senior decision makers with responsibility over at least three categories of expenditure. In this report, Q3 refers to the third quarter the calendar year (July, August, and September), Q4 refers to October, November and December. When referring to B2B spending expectations for 2022, the time period refers to business’ financial years. This included both January – December 2022 and April 2022- March 2023. A similar survey known as Global Business Spend Indicator was done between 18th March and 12th April 2021 and 5th to 31st August 2021 to explore the importance of business spending across more than 3,600 businesses of all sizes and across industries in the UK, Australia, Canada, Japan, Mexico, and the U.S.
ABOUT AMERICAN EXPRESS
American Express is a globally integrated payments company, providing customers with access to products, insights and experiences that enrich lives and build business success. Learn more at americanexpress.com and connect with us on facebook.com/americanexpress, instagram.com/americanexpress, linkedin.com/company/american-express, twitter.com/americanexpress, and youtube.com/americanexpress.
Key links to products, services and corporate responsibility information: personal cards, business cards, travel services, gift cards, prepaid cards, merchant services, Accertify, Kabbage, Resy, corporate card, business travel, diversity and inclusion, corporate responsibility and Environmental, Social, and Governance reports.
ABOUT INVEST INDIA
Invest India, set up in 2009, is a non-profit venture under the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, Government of India. Since then, it has initiated various programs to facilitate FDI inflow into India and fortify the business ecosystem by promoting a culture of entrepreneurship and innovation. Invest India has been providing facilitation support to more than 900 plus companies with an indicated investment pipeline of 164.6 billion USD across the sectors and countries out of which 25.8 billion USD has been grounded as FDI into India since 2015. Over 200,000 business queries from 125 countries and 41 sectors have been facilitated by Invest India since June 2014.To achieve the goal of boosting domestic production, Invest India has dedicated teams to manage relations with international and national partners. Invest India is the world’s most awarded investment promotion agency and works with every ministry of the Government of India to help build world-class one-stop solutions for all investor needs. Till date, it has answered more than 216,136 business queries globally and facilitated more than $175 billion. For further information about Invest India please visit https://www.investindia.gov.in/
ABOUT THE CENTRE FOR ECONOMICS AND BUSINESS RESEARCH
The Centre for Economics and Business Research is an independent consultancy with a reputation for sound business advice based on thorough and insightful research. Since 1992, CEBR has been at the forefront of business and public interest research. They provide analysis, forecasts and strategic advice to major UK and multinational companies, financial institutions, government departments and agencies and trade bodies. For further information about CEBR please visit www.cebr.com.
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