India's business confidence dipped slightly in January-March 2005 following concerns over issues such as non-uniform value-added tax (VAT) rates and the introduction of fringe benefit tax (FBT), a study said Monday.

The business confidence index declined from 75.6 percent in the third quarter (October-December) of fiscal 2004-05 to 71.6 percent in the fourth quarter, the quarterly survey of the Federation of Indian Chambers of Commerce and Industry (FICCI) said.

"The sentiment of corporate India is psychologically constrained by a confluence of factors," FICCI said, citing the oil price-driven input cost hike as another reason for the industry's pessimism.

But corporate India also demonstrated optimism about exports and investments even as it hinted adding more jobs.

"The expected buoyancy in exports assumes greater significance when viewed in light of the strengthening rupee. Further, the optimism suggests that the concerns over VAT and FBT are bound to be short-lived," a FICCI official said here.

The quarterly business confidence survey, which included samples from 55 percent of the heavy industry, 30 percent light industry and 15 percent of the services industry, also noted that credit availability improved considerably in the fourth quarter.
"As against 83 percent in the first quarter of 2004-05, 91 percent of the respondents said they faced no constraints in availing credit. This indicates that banks have become more friendly in offering loans," the official said.

Also, 83 percent of the respondents were of the view that credit costs were moderate during the fourth quarter compared to the first quarter of fiscal 2004-05.

Though the industry's ranking of current business performance vis-à-vis the last six months dipped from 71 to 61 percent, a majority of the respondents (51 percent) were hopeful of higher exports in the next six months.