Indian SMEs remain buoyant: Study

Dheeraj Dikshit,Head of SME Business,HSBC India,said: Our research indicates confidence levels in the emerging markets are stable. SMEs in India are not changing their business strategy in the next six months,despite the global uncertainty. This bodes well for the Indian economy.

The semi-annual HSBC Small Business Confidence Monitor gauges the outlook of SMEs on local economic growth,capital investment plans and recruitment.

The latest wave is the largest international survey of its kind covering over 6,300 SMEs across 21 markets in Asia,the Middle East,Europe,North America and Latin America. SMEs with an annual sales turnover of up to US10m were surveyed

Confidence across India and Asia

For the first time since the financial crisis,all Asian markets hold a positive outlook in terms of local economic growth as well as their recruitment and CAPEX plans. Vietnam is the most confident country in Asia with an index of 164,followed by Singapore 136,mainland China 123 and India 121.

Global levels of confidence

As per the survey,confidence increased across the globe from 111 to 118,with emerging markets 122 appearing seven points higher than developed markets 115. Compared to the previous results in 4Q09,the developed markets increased from 106 to 115 9 points showing signs of increased positivity within the developed markets.

Most markets across the globe held a positive outlook,with Turkey leading at 138,followed by the Middle East 132,Greater China 121,India 121,South-East Asia 119,North America 119,Latin America 118 and Europe 99. Compared to the previous results in 4Q09,Turkey showed the biggest jump in confidence up 21 points,followed by North America up 12 points and the Middle East up 7 points.

Outlook on local economic growth

In terms of economic growth,the vast majority of Indian SMEs surveyed hold a stable outlook on the local economy,with 69 per cent expecting the pace of economic growth to maintain its current momentum,and 27 per cent expecting it to increase in the next six months. Only 5 per cent expect growth to slow down.

Over a third 34 of SMEs surveyed globally and 35 per cent in Asia expect an increase in the pace of economic growth. Half 50 of SMEs across the globe and 51 per cent in Asia expect this growth to maintain the same pace. In Turkey,56 per cent of SMEs expect the pace of growth to increase,as do 49 per cent in the Middle East,followed by South-East Asia 47,North America 30,Latin America 28,India 27 and Greater China 24. In Western Europe,only 10 per cent expect the pace of economic growth to increase.

Outlook on capital expenditure

The majority 65 of Indian SMEs surveyed are planning to maintain their current levels of investments with 31 per cent stating they will increase their capital expenditure plans. Forty-one per cent globally and 39 per cent in Asia are planning to increase capital expenditure.