Look who146;s out shopping

The acquisition of NatSteel, a Singapore-based steel company, by TISCO is part of a new trend in India8217;s globalisation. This acquisition will give TISCO greater access to the South East Asian 8212; including Chinese 8212; steel markets. This is the third overseas acquisition by the Tata group. When the group bought Tetley, the world8217;s second largest tea company, in 2000 it was for the first time an Indian brand name was seen prominently in households abroad. That deal for 431 million represented the largest takeover of an international brand by an Indian company. The Tata group8217;s next big takeover was the truck unit of Daewoo. Tata8217;s competence in the domestic market lay in small trucks. The Daewoo unit8217;s competence in the high-end of the commercial vehicle market, allowed Tata to enter a whole new area in truck production, as well as access to new markets.

In 8217;01 and 8217;02, foreign acquisitions by Indian companies was dominated by software firms. Most of these were small companies at prices around 10 million. Pharma companies like Ranbaxy, Dr Reddy8217;s and Wockhardt followed in 8217;03 and 8217;04, making acquisitions of French, German and British pharmaceuticals. Others, such as the Aditya Birla group, Reliance Infocomm, ONGC Videsh and Jindal Stainless, have all gone global. Globalisation has thus acquired a new meaning in the Indian context and over the last four years there have been over 160 acquisitions of foreign companies by Indian firms. It is a kind of globalisation that the Indian critics of the process may find quite acceptable!

The multinationalisation of Indian companies has become possible entirely as a result of the liberalisation of the economy. The pressure on them to face up to global competition has been crucial in making them lean and competitive. They have been forced to cut costs and improve their technology and management skills. The opening up of trade and industry has transformed them into players in the global market. Capital account convertibility has allowed them to purchase foreign firms. After all, acquisitions of foreign companies were not possible as long as Indian companies were not allowed to take money abroad. They could not, consequently, take advantage of the scale and technology that such acquisitions offer. It is important that Indian companies are not shackled by the remaining controls on the capital account in the future. The ministry of finance and RBI should ensure that outdated rules do not hobble the increasing global competitiveness of Indian firms.