Surath Sengupta heads Hongkong and Shanghai Banking Corporation's (HSBC) global trade and receivables finance business in India. In an interview with Somasroy Chakraborty, Sengupta shares the recent trends in the trade and receivables finance business in India. Edited excerpts:
Are your clients in India keen to enhance their global presence in the current uncertain environment?
Yes. Corporates in India are keen to expand their global presence. There are industries that have experienced some slow down due to reduced demand from Europe and softer growth in India. However, this has not stopped companies in India from looking abroad to expand their customer base, acquire new technologies, secure raw materials and access new markets to balance the lack of demand in traditional markets.
Indian trade confidence is still one of the highest in the world according to the latest HSBC Trade Confidence Index (TCI) dated June 2012. The India Index score remains very positive overall at 128, the fourth highest in the global rankings against an average of 113. The HSBC Trade Confidence Index covers a total of 20 markets and is the largest trade confidence survey globally. The latest survey comprises six-month views of 5,800 exporters, importers and traders from small and mid-market enterprises on: trade volume; buyer and supplier risks; the need for trade finance; access to trade finance; and the impact of foreign exchange on their businesses. The survey was conducted by research company TNS between April 10, 2012 to June 1, 2012.
How do you help Indian companies participate in trade opportunities in the overseas markets?
HSBC is uniquely positioned in the developed and the developing economies to capture the international trade flows in both the economies. The HSBC Group's network covers 6,900 offices in 80 countries and territories in six geographical regions: Europe, Hong Kong, Rest of Asia-Pacific, Middle East and North Africa, North America and Latin America. This puts us in a unique position to assist companies in India as they expand overseas.
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As per the HSBC Global Connections Report dated July 2012, India will serve as Asia's fastest growing exporter and importer, with annualised growth averaging 5% and 7% respectively, over the next five years. I am excited about the opportunity it presents for HSBC to partner with these companies and support them in their expansion plans, through our international footprint and global expertise.
Which are the regions/countries that domestic companies are interested in for setting up business ventures?
Joint ventures or wholly owned subsidiaries abroad promote economic co-operation between India and the host countries. They result in sharing of technology and skills, access to the global market, promotion of the brand image, increased exports. Since globalisation of trade is a two-way process, integration of the Indian economy with the rest of the world with all its attendant benefits is achieved through overseas investment. Lately, we have witnessed investments from Indian companies in Singapore, United States, United Arab Emirates, United Kingdom and Hong Kong.
HSBC has recently issued its first renminbi denominated documentary credit in India. In which other currencies do you plan to issue documentary credit for Indian companies?
This documentary credit was issued in renminbi as per the requirement of our customer. HSBC's research estimates that approximately $2 trillion, or a third of China’s annual trade, will be settled in renminbi by 2015. Momentum is building fast as more than 10% of China's trade was settled in renminbi in the first quarter of 2012. As trade between these two economic powerhouses gathers pace, Indian businesses that use documentary credits in renminbi can expect increased discounts from their Chinese suppliers who no longer need to hedge against the US dollar.
What are the new products and services that the bank plans to offer to strengthen its position further in the global trade and receivables finance space in India?
In the global trade and receivables finance business, we capture both international as well as the domestic business of our clients. This enables us to understand the entire supply chain of our clients and present them with a holistic solution. As an illustration, when a company sources raw material domestically we can offer them with suppliers finance, or other structured open account solutions. Similarly, if the customer is buying raw material from abroad, apart from issuing documentary credits, we can also offer short term foreign currency loans to finance the import. On the sale side, we offer value added products like without resource export forfaiting and structured receivables finance.