RIGHT ANGLE – India Going Global

China’s Belt and Road Initiative (BRI) has always been in the news. Similarly, how India is attracting foreign investments is always a matter of debate and discussions by India’s policy-making elites. But, at the same time the fact that Indian companies are also making steady inroads in the foreign countries does not evoke the same attention in our public parlance. This is something not only surprising but also unfortunate.

It is a matter of pride that many Indian firms have slowly, but surely, embarked on the global path, leading to the emergence of Indian multinational companies. Indian industry has now established a credible presence. Indian corporations are no longer shy of investing abroad and instead have been working hard to establish a global presence by creating global brand names. A study by Prema-chandra Athukorala of the Australian National University says that Indian businesses set up 4,590 projects abroad by the end of 2020, up from 395 in 2000.

In the United Kingdom, the Tata Corporation and the Mittal Group are probably the two largest industrial houses in the country. Deals such as the Tata Group’s acquisition of Tetley Tea or Jaguar Land Rover involve household names in Britain. In Australia, the Adani Group is heavily investing in coal and is building its own rail line to move raw materials to the ports. Tata Motors has huge assembly plants in many countries, including South Africa and Malaysia. Bharti Airtel is one of the biggest telecom operators in Africa. The Aditya Birla Group is the world’s largest producer of carbon black, an ingredient in car tyres. It is one of Egypt’s biggest industrial investors and exporters. ONGC Videsh is one of the few sizable government-owned Indian businesses operating abroad, having bought up assets in countries as far apart as Russia, Mozambique and Colombia.

In the year 2021, Indian retail investors ventured into Wall Street in the United States in record numbers. With the US markets enjoying one of their best years in 2021 (S&P 500 gained over 27% in 2021), investments by Indians in US stock markets more than doubled with Indians investing to the tune of $300-500 million across top wealth management platforms. Indians have put their money on stocks like Tesla and the popular FAANG (Facebook, Amazon, Apple, Netflix and Google) in the year.

Emergence of tech startups have interested Indians to invest in the US and other international markets. Data from global investing platform Stockal shows Indian investment into the US grew more than 200% in 2021 over 2020.

What is equally noteworthy is that Indian capital’s investments abroad are not restricted to the civilian sector; increasingly, Indian corporations are also investing in defence production facilities across the world either singly or through joint partnerships. Larsen and Toubro’s Vajra artillery piece is a variant of the Korean K-9 Thunder and its TRAJAN artillery piece is co-developed with NEXTER systems of France. Bharat Forge, similarly, has bought an artillery factory from Switzerland and moved it to India. MKU—formerly Mohan Kumar Udyog—has acquired a company in Germany to compete in the production of helicopters and naval vessels and launched partnerships across the globe to sell body armour, snow boots, and night vision equipment.

But what is most heartening is that unlike the Chinese investments, which often have resulted in local protests, not to talk of the host countries falling in the debts-traps set up by China, Indian companies are welcome and extremely popular. There are three principal reasons behind this.

First, unlike their Chinese counterparts, which are invariably state-controlled and supposed to pursue Beijing’s geopolitical interests, Indian companies are mostly private-owned and they are focused on commercial interest only.

Secondly, some Indian brands owned by Birla or Mittal or Hindujas have been doing business for generations, particularly after India’s independence when the then Indian governments, notorious for license-permit raj and consequent red tape, did not consider the creation of wealth by the industrial houses or companies. These companies wanted to break free and set up some of their diversified business in other countries. For instance, a textile mill in Ethiopia in 1959 by the Birla group was perhaps one of the first major Indian projects abroad. The conglomerate then expanded across South-East Asia, where economies were opening up. When Indian economies opened up in the 1990s, this trend involving other Indian groups became stronger.

Thirdly, if Indian investment tends to arouse less resentment than that from China, that is due to the fact that Indian companies have a largely justified reputation for trying harder than the Chinese to hire and buy locally. While on average, Chinese firms employ almost a fifth of their workers from China and other East Asian countries, Indian firms take less than 10% of their workers from India. The Chinese businesses import 60% of new machinery from China, but Indian peers take just 22% from India. All this not only helps the local industries but also boosts the local employment.

In sum, globalization has given new meaning and dimension to corporate India. India is rising, indeed!