057_Global12_InFocus_IndiainAfrica_V6

Global issue 12

In FocusIndia in Africa daily volume of business is around $40 bought Tetley Tea in 2000 and set the pat- million,” says Ansalam. But this is only tern for most of the subsequent Indian for- scratching the surface: the potential – as ays overseas. similar platforms around the world have Henceforth, the majority of Indian ad- proved – is enormous once African traders ventures abroad, including in Africa, would have woken up to all the possibilities that take the form of acquisitions, mergers and such a system provides. “Of all the emerg- joint ventures. Displaying an uncanny sense ing markets, Africa is the place to be,” adds of timing and shrewd negotiating skills, a Ansalam. “This is a continent on the move, number of Indian firms, led by the likes of on the rise. The potential for us, for all In- Ratan Tata (Tata Group), Lakshmi Mittal dian companies, is incalculable.” (ArcelorMittal), Ravi Ruia (Essar Group), Shipra Tripathi, vice-president and head Sunil Mittal (Bharti Airtel), Adi Godrej of corporate global marketing and com- (Godrej Group), Onkar Kanwar (Apollo munications for Kirloskar Brothers Ltd, Tyres) and Mukesh Ambani (Reliance In- one of the world’s largest manufacturers of dustries) rapidly rose to become leading pumps and valves, is equally enthusiastic international players. about Africa. “Africa is not the next global Although large global acquisitions – such growth pole, it is already happening now. as Tata’s purchase of Jaguar and Land Rov- This really is Africa’s century,” she says. er and Mittal Steel’s takeover of Arcelor, While India has had a commercial pres- which turned ArcelorMittal into the world’s ence in Africa going back decades – the Large tracts of arable land are another attraction for largest steel company – made the headlines Life Insurance Corporation of India and Indian agribusinesses around the world, Africa had never been far Bank of Baroda catering to the needs of from the minds of India’s leading entrepre- the continent’s sizeable Indian diaspora, (local) is fine but foreign is best”. With the neurs. Tata’s vehicle operations in Zambia, and lifting of import restrictions, Indian compa- The same decade and a half that saw In- Kirloskar Brothers to name a few – nothing nies found themselves facing a stark choice dian firms flexing their new-found entre- matches the rush of Indian companies to do – compete or perish. In a world dominated preneurial muscles and aggressively look- business in Africa that has taken place over by technological innovation, competence ing for investment opportunities abroad, the past decade. was measured by technical and organisa- also saw a sharp rise in Africa’s economic To explain this in terms of India playing tional savvy and here Indian companies dis- growth. Renaissance Capital predicted that catch-up to China’s strident march into the covered a hitherto unappreciated treasure – Africa’s GDP would reach $3.3 trillion by continent is to do Indian companies a dis- a vast pool of qualified engineers, scientists 2016 and that 26 of the 44 Sub-Saharan service. Unlike China’s state juggernaut and middle management. countries would attain growth levels of underpinning its advance into Africa, the around 6 percent. Africa’s middle classes Indian spearhead is led by the private sec- were also growing, and consumer spending tor and the Export-Import (Exim) Bank, While Western was expected to reach $1.8 trillion by 2020. which to date has made some $3.78 billion companies have been Professor Paul Collier of Oxford University worth of lines of credit available to African found that the return on capital for over 950 countries. trying to make Africa African firms was on average 11 percent Rather, the relationship between Indian higher than in Latin America and Asia, and companies and Africa is a happy coinci- more Western, Indian 70 percent more profitable than for similar dence of needs. After independence, Indian companies are very Chinese firms. In addition, to a world hun- companies chugged along in the shadow of gry for energy, natural resources and culti- state-run enterprises, protected as well as comfortable with Africa as vable land, Africa’s newly discovered oil, style regulations and the infamous ‘licence it is. They have lived with ble land were making the African continent-gas and coal reserves, and vast tracts of ara hampered by a bewildering raft of Soviet- raj’ that bred corruption on a national level. and overcome similar even more attractive to Indian investors. The loosening of the straitjacket in 1991, What Western investors saw as major during the Narasimha Rao administration challenges back home challenges in Africa did not phase Indians (with Manmohan Singh as finance minis- one jot. They had lived with and overcome ter), finally allowed the private sector to similar challenges back home. “Many In- break free from its fetters and ushered in With their innate numeracy skills, Indi- dian companies see Africa as a larger, less one of the world’s most spectacular growth ans glided smoothly into the digital age and crowded, version of the Indian market,” says performances. India’s per capita GDP grew before long had begun to dominate the glo- R. S. Modi, MD of Bygging India Limited, 200 times between 1947 and 2011, and to- bal software market. Relishing their free- who scouts investment opportunities on the day the country is the third largest economy dom from frustrating curbs on size and ac- continent for Indian firms. “While Western in the world in terms of purchasing power tivity, Indian firms were able to expand at a companies have been trying to make Africa parity. giddying pace. Soon the Indian market was more Western, Indian companies are very However, until the liberalisation of the not big enough. By the turn of the century, comfortable with Africa as it is. This is a economy in the 1990s, Indian companies the giants began to look outwards. The Tata market they understand, and just as they produced shoddy and outdated goods, giv- Group made one of the largest purchases have helped India grow – and make profits ing rise to the commonly used phrase “desi by any Indian company at the time when it for themselves – they believe they can do globalfourth quarter 2012 www.global-briefing.org l57


Global issue 12
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