87% of Indian firms shift focus to domestic amid trade worries: HSBC

HSBC survey shows 87% of Indian firms are pivoting to the domestic market to reduce global exposure amid trade policy uncertainty and rising costs

Indian firms are rethinking their trade strategy amid global uncertainties, with 87 per cent shifting focus towards domestic markets, prioritising local customer needs to ensure stability and minimise international exposure, according to the HSBC Global Trade Pulse Survey.

 

The survey examined the business strategies and sentiments of 5,750 international companies in 13 global markets, including 250 firms from India, in relation to tariffs and trade. It showed that 76 per cent of Indian firms are reassessing their long-term business strategies in response to changes in trade policies, while 80 per cent reported exercising greater caution in expansion and investment decisions due to trade-related uncertainties.

 

“Indian businesses are demonstrating remarkable resilience and adaptability in the face of global trade uncertainties,” said Runa Baksi, head of global trade solutions, HSBC India, in a statement. “The findings of the HSBC Global Trade Pulse Survey highlight a pivotal shift, with Indian firms recalibrating their focus toward domestic markets and actively exploring new regions to mitigate risks and seize emerging opportunities. This dual approach underscores the agility of Indian enterprises in navigating complex trade dynamics while maintaining an optimistic outlook on growth.”

 

The survey further found that 91 per cent of Indian firms are exploring new regions less affected by trade disruption. Despite global uncertainties, 96 per cent of Indian firms expressed confidence in their international growth prospects over the next two years, compared to a global average of 89 per cent. 

 

“To achieve this, Indian firms are adapting their trade strategy to significantly increase their reliance on the US, as well as South Asia and the Middle East,” the release stated.

 

At the same time, 82 per cent of Indian firms are choosing to exit high-risk markets impacted by trade uncertainty, while 87 per cent are exploring mergers and acquisitions to support their market position or strengthen supply chains through strategic partnerships.

 

In the current scenario, 83 per cent of Indian firms anticipate a substantial rise in costs due to trade uncertainties. Meanwhile, 51 per cent of firms are concerned about escalating expenses driven by tariffs and other trade-related factors.

 

“To address these challenges, 42 per cent of Indian companies have already adjusted their prices to account for higher costs, while 48 per cent are planning similar measures. Additionally, 45 per cent of Asian firms have increased their inventory levels to mitigate supply chain disruptions, with another 48 per cent of Indian firms intending to follow suit,” the release stated.