NEW DELHI: In an environment of rising protectionism in the US, Indian firms should focus "more on their backyard" and increase the share of trade with neighbouring economies, says an HSBC report.
"Raising the share of trade with neighbouring economies has been high on India's agenda for some time, and has become even more important given the rising risk of protectionism in the West," the report said. The rise in protectionism leads to an increase in the cost of doing international business, altering trade routes and raising hurdles to obtaining trade finance.
In such a scenario, trade initiatives that are likely to lower trade barriers, are viewed positively.
Moreover, companies also adopt strategies like increasing regional trade, establishing joint ventures or local subsidiaries in more markets and capitalising on trends in consumer demands and digital technologies.
Globally, majority of firms are looking at regional partners to develop trade opportunities, with almost 74 per cent of overseas trade in Europe and Asia-Pacific being conducted within their 'home' region, the survey noted.
"Despite SAFTA, South Asia remains one of the least integrated regions so far. In an environment of rising protectionism in the US, Indian firms should focus more on their backyard, finding mutual grounds to tackle issues such as high transaction costs," the report added.