A distant dream one time, global integration never sounded sweeter than today…
As we usher in the New Year, there’s reason enough to be jubilant – and more so on the commercial front. It’s not just a matter that gladdens the heart with pleasant surprise, but a development of great pride: 2006 will go down in corporate history as a banner year for Indian business and economy for the record-shattering levels of Foreign Direct Investment, both inward and outward. And here’s the part I’m sure has left everyone in raptures – for the first time ever, India Inc. deployed more capital overseas than the influx of FDI into the country.
With an incoming investment of more than $6 billion for the period April to October in 2006 and an outflow of $8 billion on mergers, acquisitions and augmentation abroad (that is well poised to surpass $10 billion by the end of the current fiscal), the Indian multinational declared its arrival, and with much aplomb!
Be it Tata Tea’s acquisition of American food and beverage company, Energy Brands, valued at $677 million, Suzlon Energy’s takeover of Belgian power firm Hanson Transmission for $565 million, Aban Loyd’s conquest of Norwegian oil firm Sinvest pegged at $425 million, Ranbaxy’s $324 million stake in Romanian drug major Terapia or Tata Steel’s historic $11.1 billion bid for British steel manufacturer Corus, ONGC Videsh’s $425 million offer for Omimex de Colombia, Videocon’s $695 million proposition for Daewoo Electronics of South Korea, Dr. Reddy’s $572 million acquisition of German pharmaceutical behemoth Betapharm Arzneimittel, from large, medium & small, the year marked a definitive moment in the era of global integration.
The statistics tell the story of home-grown companies establishing a robust measure of credence overseas with conviction. India is well and truly ahead of the BRIC economies – Brazil, Russia and China – placing 43rd in the Global Competitiveness Index (GCI) rankings for 2006-07, besides having dethroned Japan as the second-biggest investor in the UK, with Indian firms enhancing their presence from a mere 19 in number, four years ago to over a 100 today. And it’s not just the big fry, but the global ambitions of small and medium indigenous businesses that have added momentum to the overseas expansion juggernaut, according to a research conducted by the Confederation of Indian Industry (CII) and the Credit Rating Information and Services Organisation (CRISIL) recently. And back home, an extent of amalgamation never witnessed before, hoisting the net worth of mergers and acquisitions in the country to $9.5 billion in 2006 (up from $5.36 billion last year) has meant that India’s proportion in foreign transactions has leaped from 0.72% to 1.3%. The Boston Consulting Group identifies 20% of the 100 BRIC companies which are anticipated as the drivers of the future, to be of Indian origin.
Quantitatively and qualitatively, international consolidation has lent a fresh dimension and depth to the country’s corporate arena. It is also an overwhelming reflection of the fact that the outlook abroad on the expertise and efficiency of Indian firms has widened dramatically from one of caution to that of appreciation in recent times. I’m confident that 2007, and the years to come, will observe the sectors of IT, telecom, retail, automobiles, infrastructure and hospitality create ripples of unprecedented growth for our nation. The Indian business – with its irresistible combine of skill, cost and technological prowess – has not just held its own in markets at home, but is geared to mark an indelible presence on the global vista. Perhaps, I believe, there’s not much room for any choice either...
As India becomes the preferred haven for companies yonder to arrive and invest in, we face the challenge of sustaining progress domestically – and the stupendous opportunity to integrate globally. Not just the traditional giants, but the next level of firms needs to mobilise operations on a scale it harbours tremendous potential to, if the present omens are anything to go by. And I’m sure it’s an occasion to which India Inc. will rise gloriously. When indigenous turns ingenious, it’s time for the world to watch out...!
Written On:
25/10/2007
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