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Investors continue to be positive for rest of FY20: Surendra Rosha, HSBC

Favourable steps around labour and capital sectors shall allow us to enhance growth rates in the medium term, says Surendra Rosha, CEO, HSBC India. Excerpts from interview with ETNOW.

Much has been said about the global slowdown. How would you look at the rest of the fiscal?

The slowdown in the global economy and its effects on the Indian economy have been influenced by certain structural and cyclical challenges. Yes, we have witnessed a slowdown in the GDP growth which has prompted the central bank to cut down interest rates significantly. However, we see a positive sentiment when we think about the liquidity situation of FY19-20 in terms of growth rates. Also, according to a global survey by HSBC, we figured out that the investors and customers, despite economic slowdown over the last two quarters, remain positive for the rest of the fiscal.

We have not actually seen any pickup post the elections. Do you think we need something more long term, more sustainable that will bring conviction back?

The economic slowdown in India and election uncertainty made investors wary of domestic equities.The flare-up in US-China trade tensions have also exacerbated the situation. But the real focus now is on the next three quarters. Through the first quarter we have seen a decline in growth rates and yet we are positive. If we think about the growth trajectory and how to get there, I think some enablers are already in place. For instance, the GST, the Bankruptcy Code are legislations that are getting into much more of a business as usual situation. Favourable steps around labour and capital sectors shall allow us to enhance our growth rates in the medium term.

There has been an extreme sluggishness in the economy. What is the impact of the slowdown that you have seen on corporates?

It is a mixed outcome. I would say that you know there are certain sectors where clearly there has been a huge impact. For instance, the NBFC sector has been stressed after the slowdown in the fourth quarter. According to ground reports, the current fiscal year is likely to witness relatively slow growth. Moreover, if we are able to deliver the forecast of 6.8% that HSBC is projecting, it will still be a meaningful growth in the global context.

Clearly, Europe is in a slowdown mode; the US signalling that interest rates are likely to come down because growth is slowing there as well. So, India as an economy of scale stands out.

The latest developments on the trade wars change very often depending on what Trump says but there appears to be a resolution in sight. How do you see things shaping up going forward?

Yes, I agree that the escalating trade war has unnerved the investors and it is threatening the global trade situation. But my idea is to think beyond the noise. We all know that ahead of the US-China trade war and ongoing talks at the G-20 summit, there is going to be reshaping of global supply chains. India is also not immune with ongoing discussions and global trade negotiations. These trade conversations will not only affect the bilateral trade between the US and China but will affect India too.

However, there is an opportunity for us to capture some of the moves that will happen in the supply chain. Hence, it is just about thinking which sectors work for us, where we have a competitive advantage and then driving home those advantages through conversations with large corporations.

In terms of these large corporates, which way do you see the money moving? Is interest now shifting to India as you just touched upon? What we can expect going forward.

The last six to nine months have been more happening in terms of cross- border trade conversations with companies across the region. But it is not like that India is the only option for great trade. However, people recognise that given the scale of the Indian market, there is an option here of domestic consumption also anchoring the manufacturing. Hence, there is definitely interest across certain sectors. Also, the government is pushing certain aspects of change in the economy, like electric vehicle (EVs), with a long-term goal.

The market perspective is constantly seeing pressure on some of the domestic majors to turn around on those EV plans. What are the other sectors which can benefit?

In my view, electronics is another sector that will benefit from some of the ecosystems that move across from other geographies to India. Readymade apparels and garments is also a sector where we had lost market share. But if I were to take a longer term view of historical moves, then this is an area where we might start to get some of that market share back as some of the other countries are hitting capacity.

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