In recent years, Indian corporates have been increasingly looking beyond their borders to capitalize on the bullish domestic macro conditions and expand into international markets. According to a report by Coalition Greenwich, a division of CRISIL, around 83% of large India-headquartered corporates now employ at least one bank for cross-border trade and payments—a significant increase from 71% just two years ago.
The report highlights that with economic optimism running high at home, Indian companies are seeking opportunities for growth abroad. This trend is not limited to just the largest companies in India, as roughly three-quarters of India-headquartered middle market companies are also utilizing banks for international needs. These companies are turning to both global and domestic banks to support their new international growth strategies.
Ruchirangad Agarwal, relationship director and Head of Corporate Banking – Asia and Middle East at Coalition Greenwich, notes that there has been an increase in activity by large corporates in India across various outbound, cross-border corridors into markets within the Asia-Pacific region, Europe, and North America. This indicates a shift towards a more global outlook among Indian companies.
Traditionally, Indian corporates have relied on foreign banks for their international banking needs due to their global footprint and international networks. However, the report suggests that large domestic banks are now competing for a larger share of cross-border flows, particularly from India-headquartered firms. This competition is driven by Indian banks‘ improved digital capabilities and their ability to offer competitive pricing and balance sheet support.
The increasing demand for international banking services is expected to boost revenues across the Indian corporate banking landscape. The report predicts that revenues from cross-border business will represent a growing contribution in the coming quarters. Companies require banking services to support their international growth, especially in traditional trade and receivables finance as supply chains realign within Asia.
In terms of industry performance, banking industry revenue pools increased by 4% in calendar year 2023, following a 15% increase in 2022. Cash management saw strong growth due to higher rates in FY 2023, but this is expected to moderate as rates stabilize. Investment banking pools experienced double-digit gains as primary activity in capital markets increased.
Overall, the report indicates a positive outlook for Indian corporates expanding into international markets, with both foreign and domestic banks playing a crucial role in supporting their growth strategies. As Indian banks continue to enhance their digital capabilities and offer competitive pricing, they are well-positioned to capture a larger share of the cross-border business from India-headquartered firms.