For the heck of it

Sunday, September 10, 2006

India Inc helped Uncle Sam

An interesting read on Mumbai Mirror.

Study finds that Indian cos pumped more than $2 bn into the US during 1995-05; helped sick firms, created jobs

India Inc is no longer just an outsourcing partner for the US business community.

In fact, according to a report, Indian companies’ presence in general and their contribution in particular to US firms as competent business associates is becoming increasingly significant.

So much so that American firms don’t mind an Indian connection at all.

It’s no wonder then that American companies have emerged as India Inc’s largest business partners, with USA alone receiving the highest amount of RBI-approved investment at $225 million between April 2005 and January 2006.

In the decade leading up to 2005, the US attracted the highest share of Indian direct investments approvals ($2,159 million) followed by Russia ($1,763 million), Mauritius ($1,038 million) and Sudan ($964 million), says a FICCI-Ernst & Young report.

The report – ‘Direct investments in the US by Indian enterprise’ – notes that the software/BPO sector accounted for the largest share (58 per cent) in terms of the number of deals into the US during 2004-06.

Healthcare accounted for 17 per cent while the remaining 25 per cent deals were in other sectors such as telecom, textile, automotive and financial services.

Talent projected India Inc well

High levels of technological expertise and knowledge along with entrepreneurial development and management skills helped Indian companies emerge as competent business partners.

Additionally, India Inc learnt a lot as service providers looking for outsourced IT/BPO work from the developed-countries. This imparted the knowledge to conduct international business, and induced outbound investments through demonstration and spill-over effects.

Indian firms are actually helping America

FICCI-Ernst & Young further observed that not only are Indian companies creating new jobs and boosting wages, investments from India are strengthening US manufacturing and contributing to rising productivity.

Indian companies have acquired several units in the US that had filed for bankruptcy and also set up manufacturing facilities in the US.

Indians are successfully handling the restructuring process of sick units and are increasingly gaining over their American rivals in cost and efficiency.

Outbound investments from India help US companies penetrate foreign markets, and increase exports and provides a global platform to smaller and mid-sized companies.

More on the way...

The report stated that outbound investments and acquisitions in the US by Indian companies are likely to witness a further increase.

The new found confidence in the Indian buyers, supported by strong economic fundamentals is expected to foster this growth trend.

Acquisition of manufacturing companies is likely to be gain momentum as there is a scope for significant value creation for Indian buyers to acquire manufacturing companies in developed markets and then restructure the manufacturing model by either offshoring some or all of the production activities to India.


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