Indian SMEs still bullish: HSBC survey

Small and medium Indian businesses are the third most optimistic in Asia after Bangladesh and Vietnam. According to the biannual HSBC Asia-Pacific Small Business Confidence Monitor, 98 per cent of SMEs expect to maintain their headcount or even increase them.

The survey was conducted across 3,000 SMEs in 10 Asian countries in October and November 2008. The results indicate that SMEs in India, Bangladesh and Vietnam are the most optimistic, while those in Singapore, Taiwan and Hong Kong are the most pessimistic.

Thirty-eight per cent of India’s small businesses are optimistic about the economic outlook as compared to 59 per cent six months ago. Forty-seven per cent of India’s small businesses intend to increase capital expenditure and another 46 per cent plan to maintain capital expenditure at the current levels.

Puneet Chaddha, managing director & head, commercial banking, HSBC India, said: “The responses indicate strong confidence in the Indian economy and local demand as nearly 93 per cent of SMEs, while expecting decline in trade, are still going ahead with capital investments and nearly all expect to maintain or increase headcount.”

In India, 29 per cent of the units expect trade with China and the rest of Asia to increase and 28 per cent expect trade with the rest of the world to increase. Thus, the overall trade outlook does not seem to be very positive in India, the survey noted.

Most Asian SMEs planned to maintain or increase staff and continue with capital investment, at the same time expecting trade to grow further, the survey found.

Companies were asked about their local economic outlook for the next six months, plans to increase or reduce capital investment and staffing levels, and their expectations for trade volumes with mainland China, the rest of Asia and the rest of the world.

Indian SMEs (82 per cent of a sample size of 316 SMEs) also believed that bank finance would be important for their future growth.