View from Delhi: More Indian firms in multinational league

Indian companies are at last thinking global. Gone are the days when even the biggest of them had eyes only for the home market and ignored the big world outside India. Now many of them have begun thinking of things like global market share, global ranks in capacity and revenue and global standing. And some of them are already on their way to becoming multinationals.

Last week, Reliance Industries, the flagship of Ambanis, acquired FLAG Telecom, a London-based company with an international reach in broadband services. This has now been followed by the Tatas, who are bidding for the commercial vehicle unit of Daewoo Motor Corporation of South Korea.

The Korean company makes trucks as well as tractors and, if the deal goes through, will be the first overseas acquisition of Tata Motors, which also makes trucks in India. The price could be around $150 million.

US market

Another Mumbai-based company, Mahindra & Mahindra, which makes tractors and cars, recently made a bid for Valtra, a Czech tractor firm. The bid fell through but M&M people say they are looking for similar plants elsewhere and have an eye on the US market, where they have a tractor assembly plant.

Then there is Ranbaxy Laboratories, a Delhi-based pharma company which is already something of a multinational in its own right. Ranbaxy runs a dozen manufacturing and R&D plants worldwide including America and China, and will be totting up a sales turnover of $1 billion next year.

Infotech companies like Infosys and Wipro service mainly foreign clients and have always been internationally minded, but they operate more like sub-contractors to foreign companies.

Indian companies are expanding by 10-20 per cent a year and at least 30 companies have more than a billion dollars in annual sales. About 10 companies are listed on foreign stock markets and about 30 companies have exports exceeding Rs5,000 million ($100 million) with foreign sales offices to match.

Smaller companies

Many smaller companies with expanding, overseas sales are planning to set up production capacities abroad. A Delhi-based firm dealing in spices, sells more than a third of its output in Europe and the US, mostly to overseas Indians. It now wants to set up production capacities abroad, probably in Britain.

Most Indian firms stuck to the home market and rarely looked abroad. Tata Steel will complete 100 years shortly but has not moved outside Jamshedpur, where the founder, Jamsetji Tata put up the plant. Now there are reports that the company is looking for acquisitions in Eastern Europe, where many old state-owned steel plants are said to be going for a song.

Unlike other business houses, Birlas have not confined themselves to India and have been investing abroad for a long time. They have companies in Thailand, Indonesia and Ethiopia, but surprisingly they are now focusing more on India.

According to a survey, there will be at least 20 Indian multinationals by 2010, and around 50 ten years after that.

What is driving Indian firms is the huge Indian market which is growing by 10 to 12 per cent every year. And as long that is happening, the sky is the limit for ambitious Indian corporates!

The writer is an India-based senior economic advisor