Indian firms most concerned about rising protectionism: HSBC Report

Indian firms most concerned about rising protectionism: HSBC Report
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New Delhi, Mar 21: A recent global survey by HSBC, ‘Navigator: Now, Next and how for business’, covering 6,000 companies across 26 markets revealed that Indian firms are most concerned about the increase in protectionism across the world.
The perception of rising protectionism is much higher than the global average, where three in five (61 per cent) of the 6,000 companies surveyed, think that their governments are steadily moving towards protectionism.
Meanwhile, domestic events such as the implementation of Goods and Services Tax (GST) and demonetisation, which stifled GDP growth to a four-year low in 2017, feature little on Indian firms’ minds as they begin 2018. There is strong optimism about demand for their products in the global markets, while prospects at home are also picking up.
However, the concern remains that risks of protectionism may harm their prospects in traditional global markets, especially in the United States.
More than 80 per cent of the surveyed firms see their trade finance needs and ability to access it growing over the coming year.
The survey also reveals that almost nine in ten Indian companies feel that the governments are trying to protect their domestic economies while increasing tax on imports, leading to a rise in the cost of doing business globally, changing trade routes and raising hurdles to obtain trade finance.
Firms also continue to worry about transaction costs, exchange rate volatility and regulatory issues, but overall are not too concerned about accessing finance.
Rajat Verma, Head of Commercial Banking, HSBC India said, “An increase in protectionist sentiment is causing concern about the cost of doing cross-border trade and international business. Companies are adapting business plans and relationships to participate in shifting supply chains.
Strategies include increasing regional trade, establishing joint ventures or local subsidiaries in more markets and capitalising on trends in consumer demands and digital technologies.”
The survey underlines that domestic lending conditions may tighten, in the wake of the recent banking scandals.
Trade initiatives that are likely to lower trade barriers are viewed positively in India, as a consequence of the especially-high concern about protectionism. Indian firms are most united in the positive impact of ASEAN 2025 and SAFTA on their businesses.