New Delhi: Firms in India are most concerned about rising protectionism across the world, which in turn is affecting cost of cross-border trade and international business, says a survey.
According to HSBC’s global survey, that covered 6,000 companies in 26 markets, nine in ten businesses in India feel governments are turning increasingly protectionist, more than the global average. As per the survey titled Navigator: Now, next and how for business, three in five (61%) of respondents globally think governments are becoming more protective of their domestic economies.
The rise in protectionism is leading to an increase in the cost of doing international business, altering trade routes and raising hurdles to obtaining trade finance, the survey said. Other regions where the sentiment is strongest among companies are MENA (70%) and Asia Pacific (68%).
In the US, 61% believe protectionism is on the rise, while in Europe, half (50%) are seeing a rise in protectionist tendencies. “An increase in protectionist sentiment is causing concerns about the cost of doing cross-border trade and international business,” said Rajat Verma, head of commercial banking, HSBC India.
Verma further noted companies are adapting to business plans and relationships to participate in shifting supply chains. The strategies that companies adopt include increasing regional trade, establishing joint ventures or local subsidiaries in more markets and capitalising on trends in consumer demands and digital technologies.
Globally, majority of firms are looking at regional partners to develop trade opportunities, with almost 74% of overseas trade in Europe and Asia-Pacific being conducted within their ‘home’ region. “This trend is set to continue with regional ties being prioritised in firms’ expansion plans for the next three to five years,” the report noted.
Meanwhile, firms around the world are very focused on growth, with 77% of businesses optimistic about their international business prospects, and expect the volume of trade to increase over the next 12 months, the survey added.