GLOBAL INDIAN COMPANIES
THE DRIVERS OF INDIA INC
How would you describe the contribution by global Indian companies toward the Indian economy?
Gurnani:Global Indian companies are the flag bearers of the
Indian economy. They are testimony to the success of globalization
and the ability of Indian companies to compete with
the best from across the world.
Mittal: Not only have these companies consolidated their position in the Indian market by introducing the right products and adhering to the right strategies, they have also made their mark globally by investing large amounts in all continents across the world. Expanding their presence in the Indian market has led to increased contributions from them in terms of tax revenues, employment, and the development of backward areas.
Global trade and investment is perceived to be shifting eastward. What does this mean for Indian multinationals?
Gurnani:This is good news for Indian multinationals, as one can expect these to be future markets for the products and services that they offer, as local demand starts moving up the value chain. Moreover, with Indian markets likely to be opened up further for international players, there will be greater emphasis on quality, service and localization which is a positive.
Kapoor: PE multiples of markets in India and China in the range of 16-17 percent are higher than US 14.2 percent and UK / Europe in 12X range. Indian corporations are able to attract capital at attractive rates on the back of higher growth prospects.
Mittal: In terms of trade, the U.S. and Europe have always been important regions but our trade with the Middle East, South East Asia, China was also substantial. Post-2008, there has been a renewed effort to enhance our trade with the non- U.S., non-European countries and we are in search of new markets to achieve our trade targets. I am sure our efforts will lead to increased trade engagements with China where the two-way trade is already close to US$50 billion and also the Asean countries.
Where do you see the merging and acquisition (M&A) drive among Indian companies going in the next five years?
Gurnani:It is inevitable that we will see consolidation in
many sectors and I expect Indian companies will be much
more active in executing cross-border transactions as they
reach out to cater to new markets. We have already seen
this happening with several old economy heavyweights
picking up assets across the globe in areas such as automotive,
energy and metals.
Please comment on India Inc and its standing among global corporations on the corporate social responsibility (CSR)
and sustainable development fronts.
Gurnani:On the CSR front, there is so much that can be done for the larger society, that we are part of, that there is no dearth of opportunities to contribute. At Mahindra Satyam we pioneered the concept of Emergency and Healthcare Management such as emergency ambulance service. On sustainability, India Inc is seized of its responsibilities.
Kapoor: India Inc is far behind most in the current waves of CSR and sustainability. As a nation we have a long history of generous corporations using philanthropy to work with the communities where we operate. Moving to a more strategic, mainstream engagement has been slow – but is the key to India’s development, both to seize opportunities as well as mitigate risks.
Mittal:We are addressing a massive opportunity of including millions in this growth story as new and untapped markets unfold. However, we have challenges - developing human capital in general and quality talent for employment as well as infrastructure to support these exciting changes and opportunities. This we are doing fully conscious of social and environmental imperatives and look for environment friendly technology transfer.
The recent summit in Bangalore, where both Indian and foreign
multinationals pledged billions of dollars in investment,
reflects India’s growing strength as a competitive investment
destination. Why should (or why should not) global Indian
companies be focusing more on the market at home?
Kapoor: Global Indian companies must also focus on the home markets and improve their product, services and approach or else face irrelevance and being overwhelmed,e.g., the white goods sector from being Indian company dominated 7-8 years ago has completely transformed as the local companies did not grow technologically.
Mittal: With income levels rising, discretionary spending will also increase and India is expected to be the fifth largest consumer market in the world by 2025. Our demographic dividend is unmatched and our manufacturing and service sector is robust. When these factors attract foreign companies to India, why would global Indian companies ignore their domestic market?
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