India emerging as global business power: ISB survey

With foreign assets growing by more than 100 per cent annually in recent years, Indian multinational enterprises (MNEs) have become significant investors in global business markets and India is rapidly staking a claim to being a true global business power, according to a survey of Indian MNEs investing outside India.

The survey done by the Indian School of Business (ISB) and the Vale Columbia Center on Sustainable International Investment (VCC) was released at Columbia University in New York on Monday.

According to an ISB press release, the survey is part of a long-term study of the rapid global expansion of MNEs from emerging markets, in particular from the so-called BRIC countries — Brazil, Russia, India and China. It establishes a baseline against which subsequent developments can be measured.

The survey identifies 24 large multinationals and ranks them on the basis of their foreign assets. These 24 companies are among the largest outward investors from India and, in 2006, they jointly accounted for $15.3 billion in foreign assets, 60,000 in employees abroad, $12.7 billion in foreign sales and 441 foreign affiliates (branches, subsidiaries, etc) in 75 countries.

The leading company on the list of 24 was the state-controlled Oil and Natural Gas Corporation (ONGC), which accounted for 31 per cent of the foreign assets on the list. It was followed by the conglomerate Tata Group, accounting for a further 27 per cent. The Tata Group – which includes Tata Steel, Tata Chemicals, Tata Consultancy Services (IT), Tata Motors and Tata Communications (telecoms), among other companies – had the largest number of employees abroad, just under 25,000.

Although the ranking by foreign assets draws on 2006 data, the ISB said the report goes beyond it to provide information about large Indian investments in 2007 as well. The largest brownfield investment through a merger or acquisition targeting an existing company in 2007 was the Tata Steel acquisition of Corus Group (UK) for about $ 12.7 billion, while the largest greenfield investment was by GAIL, formerly the Gas Authority of India Limited, which invested $4.2 billion in petrochemicals in Saudi Arabia. The foreign assets of India’s top MNEs could have doubled in 2007, given the large increases in outward investment in that year. Outward M&A deals alone surged to nearly $ 25 billion in 2007.

Indian firms (like their Chinese counterparts) are seeking natural resources abroad, as well as leveraging India’s special edge in information technology and pharmaceuticals.