Indian businesses more optimistic about recovery; ready for investment but fear about this

Businesses in India expect that the losses incurred due to the coronavirus pandemic will reverse faster than those in the other countries. 87 per cent of Indian businesses expect to return to pre-Covid profitability levels by the end of 2022, said the Navigator 2020 India report by HSBC. Despite ongoing protectionism, businesses are positive about finding routes to international markets, the report added. 93% of companies expect their international trade prospects over the next 1-2 years to be positive. However, compared to previous years, now more companies think that countries are becoming more protective of their domestic businesses. Businesses also believe that a reduction in international trade would restrict employee movement, increase costs, and decrease demand.

Despite the losses, the Indian businesses are also willing to invest. Nine in ten companies intend investing more next year, compared with about two-thirds globally and in APAC. For around two-thirds of companies, the immediate investment priorities are the customer experience; marketing and sales channels; employee wellbeing and upskilling; and transforming supply chains; to make them more secure. Adding to it, they also plan to increase or maintain investment in key technologies.

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Fear of supply chain disruptions

However, nearly all companies are concerned about supply chain disruptions. 98 per cent of Indian businesses have concerns about their supply chain, such as instability or geographic distance from companies and their customers. In response, they are selecting suppliers according to the situation of the pandemic in their country, as well as their operational resilience, and speed of delivery. Around a third of businesses have diversified their suppliers, and an equal proportion has reduced them.

Reflecting these changes, the primary areas for investment in 2021 will be the use of digital or technology, and focusing on suppliers closer to customers, as well as closer to home, the HSBC report underlined. Two-thirds of companies in India say they are adapting to the new environment, compared with 58 per cent globally.