India SMEs among most confident in world, says survey

Small and medium enterprises (SMEs) in India are among the most confident in a survey of 12 emerging markets aoround the world, the HSBC emerging markets small business confidence noted.

A semi-annual survey of the small business sector, the HSBC emerging markets small business confidence monitor reflects the views of more than 3,400 SMEs in 12 markets across Asia, Latin America and the Middle East.

Respondents were asked about their six-month outlook on economic growth, capital investment plans, recruitment plans and trade. The results were used to calculate a monitor ranging from 0 to 200 where 200 represents the highest confidence level, zero represents the lowest and 100 neutral. The survey was conducted in May and June 2009.

The regional index rose from 92 in the fourth quarter of 2008 to 107 in the second quarter of 2009.Vietnam score the highest index with 150, followed by India at 128, Mainland China at 105 and Indonesia at 101.

In terms of local GDP growth, 43% of India SMEs expect faster growth to in the next six months and 47% expect the maintain the same pace as in the fourth quarter of 2008. Just 10% expect slower growth, the survey said.

Talking about the outlook on capital expenditure, the survey revealed that across all 12 markets, most businesses are not planning to make changes to their capital investment plans. ?In India, 37% plan to increase expenditures, 57% plan to maintain the same level as last year, and 6% plan to decrease expenditures,? the survey said. The survey also showed that the majority of small businesses are holding steady on staff levels and very few SMEs plan to cut jobs. In India, 75% plan to maintain the same level as last year, 22% plan to increase staff and 2% plan to cut staff.

?The increasing confidence of SMEs in India, the bellwether of the country?s economy, is a positive sign. Challenging times notwithstanding, SMEs are gearing up for the upswing, and this is reflected in their views on capital expenditure and jobs,? said Dheeraj Dikshit, head SME business, HSBC India. Dikshit also noted that sector such as textile and diamond have been impacted due to the crisis.