Indian SMEs to scale up investment plans as growth returns: HSBC survey

On the back of a strong economic recovery, a major chunk of the small companies in India are expected to hike their business investments in the first half of 2010, an HSBC survey today said.

Nearly 50 per cent of the small and medium enterprises (SMEs), which were surveyed, said they are more confident to invest in business as growth prospects have returned and would increase capital expenditure.

"Indian SMEs have once again emerged among the top reiterating the fact that India stands tall amongst its counterparts in the west and also in Asia," HSBC India, head of SME Business, Dheeraj Dikshit said.

HSBC Small Business Confidence survey, participated by 6,000 SMEs across 20 markets including Asia, the Middle East, Europe, North America and Latin America, evaluates the six-month outlook of SMEs on economic growth, capital investment plans and recruitment.

According to the survey, the confidence of Asian SMEs have bounced back to the pre-crisis level. Indian firms showed an upward trend, emerging among the most confident when compared to its global counterparts.

More than 50 per cent of Indian SMEs expect the country's GDP growth to maintain the same pace in the next six months while 41 per cent expected the pace to increase.

The survey, which was conducted in October and November, last year, found that Vietnam remained at the top of business confidence with an index of 160, followed by India (132), mainland China (124) and Singapore (117).

On recruitment plans, 25 per cent of Indian SMEs said they will increase staff in the next six months, up from 22 per cent in 2009 while 71 per cent said they plan to maintain the  staff levels.

According to the survey, emerging markets in Asia, the Middle East, Latin America and Eastern Europe emerged as most optimistic than the developed markets of the US, Canada, the UK and France.

"There is a rebalancing of the world economy, and emerging markets are becoming more and more important as a driver of growth. Small businesses are at the heart of this growth, driving local job creation, investment and productivity," HSBC chairman personal and commercial banking, Sandy Flockhart said.