We have a lot of potential in our business, but we have no confidence in the payments," says Patel, speaking over the noise of a mixer whirring behind him.All those interviewed by Reuters reported clients delaying payments, sometimes for the best part of a year, evidence of an uneven recovery and of India's credit drought as banks tackle $100 billion of troubled loans.But until reforms come in, the bureaucracy is overhauled and real spending starts, factory managers in this baked corner of Gujarat - where paints, pumps and engineering parts dominate production - say their clients will continue to struggle. Shankar Raman says payments take around 100 days after they fall due, compared to a standard 60-75 days.Gujarat, for one, has pushed taxes online, cutting down on the paperwork and opportunities for corruption, and manufacturers say that had made processes smoother. Workers around him prepare paint to be decanted by hand into cream and grey coloured cans. He wants to boost a sector that accounts for under a fifth of the economy, compared to a third for China, the world's largest manufacturer.That is hovering around the longest payment period in over a decade, he said.
Loans to small companies dropped more than 3 percent in the period."The way the recovery is structured right now, it is not broad based," said economist Sonal Varma at Nomura. Others report battling outdated factory rules: some are fined for a lack of spittoons, for example, in areas where spitting on the floor is forbidden.Under Prime Minister Narendra Modi, who once ran Gujarat as chief minister, India has sought to improve life for manufacturers. Government spending, however, could improve cash flows even for smaller firms within six to 12 months, she estimates."We have a young workforce," said Vivek Sarwate, who runs plants outside the city of Vadodara for Schneider Electric, making components for the Indian power sector.And with lots of workers, India needs more skilled ones.Made in IndiaIndia badly needs manufacturing to fuel its recovery and create jobs.
