Mittal buys Arcelor… Tata Steel acquires Corus and eyes POSCO of South Korea… Wipro to hire 1000 professionals in Georgia… NIIT buys a British company… Aditya Birla’s Hindalco acquires Novelis… and the list goes on. These are recent mega-deals by NRI/Indian owned companies with global ambitions. The latest Forbes’ list of billionaires has more hailing from India than from Japan. It is not just that India now has few more billionaires… the Indian middle class is expanding and getting more affluent, and they are consuming more, expanding Indian domestic market – a domestic market that adds almost 7 million new cell phone subscribers each month!
Since India opened up its economy following the 1991 Gulf War, the changes have been profound. India’s foreign exchange reserves have grown from a mere $6 billion to a respectable $180 billion. There certainly is a sense of confidence and optimism in India. She has been a country with “potential” for far too long, and at last she is truly an “emerging” economy. For the sake of the half a billion people below the poverty line, I certainly hope she will be a “developed” economy soon. At the very least, the horrors of East India Company enslaving the country are somewhat fading away. She is no longer fearing the multinationals, as she did in the sixties and seventies. As a net producer of intellectual properties, India is now advocating stronger patent regime. Gone are the days of insisting on process patents and reverse engineering. Reddy Labs and Ranbaxy are competing head-on with multinationals- actually, they ARE becoming multinationals.
A few years back, Dr. Jagdish Sheth wrote a book titled, “The Rule of Three: Surviving and Thriving in Competitive Markets.” In this book, he observes that each industry supports three established players and several niche players. When the automobile industry matured, the 200 plus carmakers consolidated into the big three in US. As that industry is becoming global, we will soon have the three global players left behind. Of course, there will be many niche players such as Ferrari and Panos. When many Indians and NRIs were elated by Wipro and TCS and Infosys getting into the one or two billion dollars range, he cautioned that these companies are still very small compared to Accenture or IBM, and they better grow fast, or risk being swallowed. Over the past year or so, the Mittals and Tatas and Ambanis are making me believe that Indian companies are confident and capable of emerging as global players.
India always had management as well as entrepreneurial talent. Even under British occupation, entrepreneurship thrived, unlike in the case of Russia under the Soviets. The Indian bureaucracy can put the British to shame. Yes, Minister. We learnt it all too well. Even the famous East India Company was run by Indian managers. Hindustan Lever and subsidiaries of other multinationals are now providing senior management (as in CXO level) talents for their parent companies. Unlike in the case of China with uneven flow, with goods flowing out and capital coming in, the trade between India and the West is proving to be a two way street, with capital, goods and to some extent talent flowing both ways. Yes, we hear frequently of Europeans and even some Americans moving to India. Apparently, India has a severe shortage of senior management talent. But, many emigrant Indians are returning back to India in large numbers for sure.
These bold new companies of India have the advantage of a large and growing domestic market to rely upon. These companies certainly excel in spinning out products that are affordable for consumers in India and other developing/under-developed countries. Rattan Tata and Ravi Kant are planning to build a car priced at one lakh rupees ($2,400), which we can call the “janata-wagan” along the line of VW. India has given up on the notion of “appropriate technology” that often ignored the advances in Science and Technology. The new “mantra” is making technology affordable to the poor. This slight shift in mindset goes a long way. Similarly, transforming Indian companies into multinationals, rather than keeping multinationals out, is yet another positive development. Especially, the mergers and acquisitions by Indian companies help them get good at branding, marketing and sales. The companies of India are on a bold journey. I wish them well.
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