Protectionism major worry for Indian companies: HSBC survey

New Delhi: Indian companies are most concerned about rising protectionism across the world, finds an HSBC survey covering 6,000 companies across 26 markets.

The survey shows that nine out of 10 businesses in India feel that governments are turning increasingly protectionist, leading to a rise in the cost of doing international business, an altering of trade routes and raising hurdles to obtaining trade finance.

This is significantly higher than the global average where three in five (60%) think governments are becoming more protective of their domestic economies.

Other regions where sentiment is strong among companies are Middle East and North Africa (70%) and Asia-Pacific (68%). In the US, 61% believe protectionism is on the rise, while in Europe, 50% see an increase in protectionist tendencies.

While the survey was carried out in January this year, well before the US raised tariffs on steel and aluminium, and the US dragged India to the World Trade Organization on the latter’s export subsidy schemes, businesses seem to have reacted to the overall protectionist scenario around the globe.

As a result of the high level of concern about protectionism, initiatives aimed at lowering trade barriers are viewed positively in India. Firms are near unanimous on the positive impact of Asean 2025 and SAFTA (South Asian Free Trade Area) on their businesses. And, perhaps surprisingly, even with the negative press around H-1B visas, most firms (63%) believe that US policies and its regulatory environment will be beneficial for their businesses. The firms are less optimistic about China’s Belt and Road Initiative though, with 22% respondents indicating a negative impact on their business.

Despite rising risk aversion among commercial banks in India, more than 80% of the surveyed firms see their trade finance needs and ability to access it increase over the coming year. Firms continue to worry about transaction costs, exchange rate volatility and regulatory issues, but overall are not too concerned about accessing finance—only 1% expect more difficulty in obtaining credit in the year ahead.livemint

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