‘India’s tech drive fuels foreign M&As’

Vijay Chandok,the managing director of ICICI Bank UK,the British subsidiary of Indian bank ICICI,said these overseas purchases are being fuelled by the desire to diversify geographically as well as the need to acquire know-how in order to boost growth.

“They are looking to build capabilities by acquiring access to brands and patents,” he said at the Global India Business Meeting,a two-day gathering of top Indian business leaders in Madrid which wrapped up yesterday.

In an example cited at the gathering,India’s Tata Steel went from having not one single American patent to owning over 80 after it bought Anglo-Dutch steelmaker Corus in 2007 for 12 billion dollars.

As Indian firms have grown bigger,they have boosted their spending on research and development to help them move up the value chain.

But such investments take time to bear fruit and buying a foreign firm is an attractive short-cut to getting more sophisticated production equipment.

“Acquiring knowledge and the potential for research will continue to be a major driver of foreign acquisitions by Indian firms,” said Ravi Chaudhry,the chairman of India’s CeNext Group.