World takes note of India Inc's advances

A string of acquisitions abroad by Indian companies, which have spent over $10 billion to buy foreign firms this year, is not a one-off thing and may continue for years to come, complemented by a healthy economic growth at home.

"The one reason Indian companies are suddenly growing abroad is because they can," Time magazine said in an article 'India Takes on The World' in its latest issue.

The Time article, which warns big companies to beware "that Elephant in the room," comes ahead of the World Economic Forum's annual India Economic Summit--an event which allows companies to network and strike multi-million dollar deals in closed-door meetings.

"In the first 10 months of 2006, Indian companies cut more than $10 billion worth of cross-border deals, up from about $1billion in all of 2000," the magazine stated.

This figure is twice the amount which the foreign companies have invested in India, according to Dealogic, which tracks global merger and acquisition activity. Tata Steel's $8.1 billion bid to acquire Corus finds special mention.

The companies derive their boisterousness "from a decision the government took over 16 years ago -- that of opening up the economy".

"In the early 1990s, the government began to slowly open up the economy. Anticipating an eventual onslaught from outsiders, the country's more far-sighted industrialists decided to modernise their operations. As a result, the most efficient businesses were able to reap outsized profits," opines Delphine Cavalier, a Paris-based economist at BNP Paribas.

"Today, with competition now mounting in India, those same groups are seeking to protect the profitability by taking their activity abroad, knowing that continued economic growth in India will provide a strong base in the years to come," Cavalier was quoted by Time.

The magazine said the government's decision last year to double the cap, on how much Indian firms can invest abroad, to 200 per cent of a company's net worth is also a reason behind the recent buying spree of India Inc.

Besides, India-born business executives are climbing the corporate ladders at well-known multinationals.

There is a real bullishness among the leaders of Indian industry, India-born co-founder of Hotmail Sabeer Bhatia was quoted as saying.

It said from 2002 to 2006, India made 176 investments in Europe, against 114 by China over the same period.