A comprehensive, global study entitled ‘Pivotal: How treasury and finance enable a new era of globalisation’ conducted by DBS reveals the growing strategic influence that treasury and finance teams have on the long-term future of the business.
DBS’ new research – based on a survey of 570 senior leaders in nine sectors and 15 countries including India, reveals the strategic influence of treasury and finance teams in India is paramount to the long-term success of businesses. The survey offers valuable insights into how financial strategies and diversification efforts are driving growth and innovation.
The DBS study reveals that companies that empower their treasury and finance leaders to take on more involved roles and adapt to new responsibilities are better positioned to identify and capitalize on opportunities in a dynamic global marketplace.
Here we look at what this means for businesses in India
India's economic landscape is marked by a diverse and dynamic business environment. As one of the fastest-growing major economies globally, India's GDP reached approximately USD 3.5 trillion in 2023, with an annual growth rate of 6–7%. The country’s diverse manufacturing sector, which includes major exports like refined petroleum, machinery, vehicles, and pharmaceuticals, plays a crucial role in global trade. India’s strategic location between East Asia and the Middle East positions it as a key transit point for goods and services, further enhancing its importance in the global supply chain.
Key industrial sectors such as agriculture, manufacturing, mining, and construction remain the backbone of India's economy. However, the focus is rapidly shifting towards diversification, as businesses aim to secure new skills, improve productivity, and explore new markets.
The research study identifies the top three strategic priorities for Indian businesses over the next two years:
78% will give priority to securing new skills and talent
76% will focus on improving productivity and operational performance
72% are committed to business diversification
Business diversification in India is driven by innovation, finance, and new channels to market. The DBS Bank research highlights that 78% of executives are pursuing diversification in these areas, with 72% also aiming to expand geographically. However, this diversification is not without challenges. The threat of new entrants into the market is a significant concern, with 42% of respondents identifying it as a barrier to growth. This figure is notably higher than the global average of 27%, indicating the competitive nature of the Indian market. Access to capital and financing, as well as the increasing trend of regionalization and nationalism, are also cited as obstacles.
In this context, the role of treasury and finance teams becomes even more critical. These teams are not only leading efforts in geographical diversification but are also instrumental in securing alternative financing and driving innovation. A striking 92% of businesses in India report that their treasury and finance teams are heavily involved in these strategic areas, underscoring their importance in the corporate decision-making process.
The influence of treasury and finance teams in India extends far beyond traditional financial management. According to the research, these teams are deeply involved in shaping corporate strategy, with 92% of respondents indicating their involvement. This is followed by procurement and supply chain management (88%) and innovation and new product development (78%). The integration of finance into the innovation process highlights the strategic role these teams play in driving business growth.
Interestingly, Indian businesses are more engaged in Environmental, Social, and Governance (ESG) reporting and compliance compared to their regional peers. This could be attributed to the stringent ESG-related regulations in India, growing investor expectations, and enhanced corporate governance standards. The survey shows that 65% of Indian respondents are involved in ESG reporting, compared to 62% in Singapore, 53% in Hong Kong, and 41% in China.
Another critical factor for businesses in India is the availability of a diverse talent pool. A significant 84% of respondents cite this as a key consideration when deciding where to locate their treasury and finance functions, reflecting the need for diverse skills and expertise in a complex economic environment.
Looking ahead, the outlook for treasury and finance teams in India is promising. The research indicates that 68% of executives believe these teams will be integral to business success in the new era. This is the highest percentage among all the markets surveyed, highlighting the critical role these teams play in India’s rapidly evolving economy.
However, challenges remain. The survey identifies areas where treasury and finance teams need improvement, such as understanding different priorities across executive leadership (26%), securing favorable financing for diversification initiatives (24%), and addressing talent and skills shortages (24%).
In response to these challenges, Indian businesses are emphasizing the need for collaboration across finance, procurement, and strategy teams to ensure alignment on common goals. Additionally, the increasing importance of securing financing for new strategic initiatives in Asia is becoming a priority for 66% of respondents. The adoption of generative AI is also seen as a solution to talent shortages and a way to enhance the strategic capabilities of treasury and finance teams.
Speaking on the launch of this survey, Rajat Verma, Managing Director and Head of Institutional Banking, DBS Bank India said, “Amidst global headwinds, there are emerging opportunities for companies to benefit from the shift towards Asia by harnessing the power of innovation and data-driven decision making.”
“The new DBS study reveals how the role of Treasury has been evolving strategically within this paradigm to drive business results, unlock value and manage risk. As a trusted partner, DBS Bank is committed to leveraging our established regional network and expertise in digitalisation to help companies navigate this path forward," he added.
The strategic importance of treasury and finance teams in India cannot be overstated. As businesses navigate the complexities of globalization, digital transformation, and regionalization, these teams are at the forefront, driving innovation, securing financing, and shaping corporate strategy. With high expectations and a rapidly evolving business landscape, the ability of these teams to adapt, collaborate, and leverage new technologies will be crucial to their ongoing success. As India continues to grow as a global economic powerhouse, the role of treasury and finance teams will only become more critical in ensuring sustainable and strategic business growth.
Divyesh Dalal, Managing Director & Head – Global Transaction Services, SME & Institutional Liability Business, DBS Bank India, said, “The Pivotal 2024 survey indicates that businesses in India are leading their regional peers in ESG reporting and compliance, which corresponds closely to trends we have seen with DBS clients in the country.”
“Treasury and finance teams are going beyond their traditional remit in driving value for the organisations. They are increasingly looking to better leverage emerging technologies like AI and generative AI to build their core businesses. As companies become more global, the competitive advantage derived from integrating sustainability and digitalisation into operations will be the deciding factor for long-term business success.”
