NEW DELHI: Of all the business houses across the globe, Indian companies are the most concerned about increasing protectionism, says a latest survey report by the HSBC bank.
“Almost nine of 10 businesses in India feel that governments are turning increasingly protectionist, leading to a rise in the cost of doing international business, altering trade routes and raising hurdles to obtain trade finance,” said the HSBC report “Navigator: Now, next and how for business” released on Wednesday. The report which covered 6,000 firms surveyed across 26 countries said that the concern among Indian businesses is significantly higher than the global average, with three in five (61 per cent) firms globally are concerned regarding rising protectionism.
In terms of region, the sentiment is strongest among companies in Middle East and North Africa (70 per cent) and Asia-Pacific (68 per cent). In the US, 61 per cent are concerned while in Europe, 50 per cent companies expressed concern over rising protectionism, according to the survey.
Interestingly, even with the negative press around H1B visas, most firms (63 per cent) believe that US policies and regulatory environment will be beneficial for their businesses. The firms however are less optimistic about China’s Belt and Road initiative though, with 22 per cent respondents indicating a negative impact on their business.
The report said that in this context, raising the share of trade with neighboring economies has become even more important given the rising risk of protectionism in the West. However, despite the South Asia Free Trade Agreement and the ASEAN-India Free Trade Area, progress in actually growing trade with Asian neighbours has been slow. “Now all eyes are on the Regional Comprehensive Economic Partnership (RCEP), to which India is an intended signatory. When concluded RCEP would be the world’s largest trading block, which will give a meaningful boost to India’s goods and services trade prospects and facilitate its ‘Act East Policy’,” the report said.
The report adds that despite these concerns recent trends in India’s exports will persist in the long run, with the share of medium and high-tech manufacturing goods becoming increasingly important.
Hotspots for goods exports
India’s export destinations have diversified over the last few years
Rank 2016 2030
1 USA USA
2 UAE UAE
3 Hong Kong China
4 UK Hong Kong
5 China Vietnam
Source: Oxford Economics