Vadodara, November 18

In the office of the small paint factory he helps run, Pramod Patel is clear on the problem holding back India’s manufacturing growth: cash, or a lack of it.

Clients, he says, are taking months to pay, sometimes 150 days compared to the standard 30, choking

up businesses like his Reliable Paints and hampering the creation of much-needed jobs.

“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. Workers around him prepare paint to be decanted by hand into cream and grey coloured cans.

While there is no comprehensive data for the cash cycle of India’s manufacturing industry, manufacturers interviewed by Reuters in the industrial heartland of Gujarat say cash is moving at a glacial pace.

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.

Central bank data shows that loans to medium-sized industrial companies were down 10 per cent by mid-September, compared to the start of the financial year in April. Loans to small companies dropped more than three per cent in the period.

Under PM Narendra Modi, who once ran Gujarat as chief minister, India has sought to improve life for manufacturers. 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.

But the reality on the ground is tough. Even India’s industrial bellwether, Larsen & Toubro, has reported deterioration. Chief Financial Officer R Shankar Raman says payments take around 100 days after they fall due, compared to a standard 60 to 75 days.

That is hovering around the longest payment period in over a decade, he said.

India badly needs manufacturing to fuel its recovery and create jobs.