Indian companies on a shopping spree in US

India was seeking direct foreign investment from American multinationals like Boeing, General Electrical, Ford, Dell...

India was seeking direct foreign investment from American multinationals like Boeing, General Electrical, Ford, Dell and IBM all these years. Now water seems to be flowing in the reverse direction.

As a result of the opening of the economy, Indians firms are quietly making inroads into the American market by large-scale acquisitions. A joint study carried out by the Ernst and Young with the Federation of Indian Chamber of Commerce and Industry says that between 1995 and 2005 the US attracted foreign direct investment from India amounting to $2,159 million. India was followed by Russia ($1,763 million), Mauritius ($1,038 million) and Sudan ($964 million).

RBI figures say that Indian investment in the US was $225.147 million between the period of April 2005 to January 2006. Indian companies invested in some 60 existing businesses between 2004-06. Unlike earlier trend when Indian firms established their own units in countries like Japan and Korea, the multinationals took the acquisition route this time

“Acquiring an established business is an easier and a safer mode of venturing overseas than setting up greenfield operations. Acquisition of assets brings in a new dimension for the business and can be one of the quickest ways of fuelling the growth of the business,” said the report on ‘Direct Investment in the US by American Enterprise’. The report said: “Indian companies have several funding options and easy liquidity in Indian debt markets and a booming capital market has made availability of cash easier”. Since January 2005, Indian firms have raised $7 billion through FCCBs.

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