European Businesses Cautious About India’s Growth Potential, Reveals Study

European businesses are still unsure about the growth potential of India, according to figures revealed in HSBC Commercial Banking’s annual Brand Tracking Survey. Despite the booming population and growing consumer wealth in India, few businesses across Europe believe it offers the best potential for business growth.

In Poland, only 1% of businesses identified the country as their premier target for business expansion. The story was similar in Turkey, where only 6% of businesses ranked India in top place when it came to targets for growth, while the figure was marginally higher in France at 7%.

Alan Keir, HSBC Group general manager, global co-head commercial banking, said: “The results indicate that there is still a lack of understanding among some European companies about the sheer potential for business development in India.

“While the majority of businesses surveyed may feel more comfortable in trading with western Europe, a fundamental shift to India and the East is taking place. European businesses that continue to focus solely on European markets are at risk of missing out on the opportunities offered through everything from booming consumer wealth to infrastructure demands in India. ‘Thinking businesses’ that maximise human capital and invest in consumer insight when looking East will see they’ve got a very different, but a very successful business,” said Keir.

China, on the other hand, has a stronger growth potential according to the European businesses surveyed. Of the 42% of businesses in Spain currently trading with mainland China, 16% believe the country offers the best potential for business expansion. Slightly more businesses in Turkey and Ireland (17%) see China as the best market for expansion.

The results from HSBC’s Brand Tracking Survey 2010, which monitors international trading behaviour across businesses in 10 European countries, found a high proportion of companies prioritise trading with western Europe, including more than two thirds of all businesses in Ireland, Czech Republic, Poland, Malta, Spain and Greece. In Poland, 93% of small and medium-sized enterprises (SMEs) currently focus their trade activity in this region.

A number of sectors are benefitting from the growth of India, where total infrastructure investment between 2008 and 2018 is estimated at US$620bn. The world’s number two retailer, Carrefour of France, is looking to set up cash and carry outlets in the country, while Volkswagen and Hyundai Motor have had to introduce waiting lists for its cars after sales in India increased by more than 30% this year.


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