Book Review: The Rise of Indian Multinationals: Perspective of Indian Outward Foreign Direct Investment

In its publication „Reserve Bank of India Occasional Papers“ (Vol. 32. No. 1, Summer 2011) India’s central bank has published a review of the book „The Rise of Indian multinationals: Perspective of Indian Outward Foreign Direct Investment“, edited by Karl P. Sauvant and Jaya Prakash Pradhan with Ayesha Chatterjee and Brian Harley (Palgrave MacMillan: New York), 2010; pp 284, £90.

The review also includes a chapter on Indian investments in Germany. The reviewer Arvind K. Jha (Assistant Adviser, Department of Economic and Policy Research, Reserve Bank of India, Mumbai) writes:

„Chapter 8 on ‘The Emergence of Indian Multinationals: An Empirical Study of Motives, Current Status, and Trends of Indian Investment in Germany’, by Rajnish Tiwari and Cornelius Herstatt, presents the results of a empirical survey conducted among Indian subsidiaries operating in Germany. Survey brings out the fact that the majority of Indian companies investing in Germany are from service sectors like software and IT industry (more than half of Indian companies), pharmaceuticals and the automotive industry. Important factors behind the Indian OFDI to Germany are long tradition of economic relations between these two countries, proximity to their customers and suppliers, large access to German market and availability of skilled labour. Another interesting finding of this survey study is that Indian MNEs are net job creators in the Germany. The study also finds that Indian subsidiaries have generally performed well and look forward to strengthen their operational presence in Germany, including research and development activities. However, the survey also highlights the challenges, including cross-cultural issues, being faced by Indian MNEs in Germany.“

Source: Reserve Bank of India

„Indian IT cos in US paid $15 bn taxes in last 5 years“

„The Indian IT industry in the US has contributed $15 billion in taxes alone in the last five years“, according to India’s Foreign Secretary Ranjan Mathai.

According to a report appearing in the Economic Times (Feb. 8, 2012):

NASSCOM estimates that Indian industry employs over 100,000 in the US up from 20,000 six years ago, he said adding it supports 200,000 other jobs, including indirect ones, apart from enhancing the competitiveness of some the US industries.

„Most Indian companies are setting up development centres. Indian IT industry contributed $15 billion in taxes over the last five years. This success story should not be set back by stringent visa regulations which act as a non-tariff barrier,“ he said.

„According to a back of envelope calculation – Indians paid over $200 million in visa fees. Perhaps $30-50 million has been taken from young aspiring Indians working in businesses whose US visas were rejected. The pink slip has become a greenback!“ Mathai said.

Source: The Economic Times, online, 08.02.2012

BusinessWeek: „Tata Consultancy Seeks Purchases in Germany, France, Japan, U.S.“

Sept. 26 (Bloomberg) — Tata Consultancy Services Ltd. is weighing acquisitions in France, Germany, Japan and the U.S. as Asia’s biggest computer services provider by market value sees further rising demand despite global economic woes. […]

Chandrasekaran declined to comment on a Sept. 7 report by Financial Times Deutschland that Tata Consultancy may learn the outcome of a bid for a majority share in the information technology arm of Deutsche Lufthansa AG after a Sept. 29 board meeting of the German airline. […]

Source: BusinessWeek, 26.09.2011.

REpower und Suzlon bauen Kooperation aus: REpower wird „indisch“

Laut einem Bericht in der heutigen Ausgabe der Financial Times Deutschland (FTD, 22.09.2011) hat der Hamburger Windturbinenhersteller REpower „den Kampf um den riesigen chinesischen Markt verloren“. Der Berichtet zitiert Konzernchef Andreas Nauen mit den Worten: „Der chinesische Markt ist geprägt von einem ruinösen Preiskampf, und unsere Verkaufsmerkmale wie Qualität und Service zählen nicht“. REpower soll nach FTD-Informationen „den Verkauf in Schwellenländern weitgehend seiner Mutter Suzlon überlassen“, z.B. weil „die Inder bei dem Preiskampf besser mithalten [können] als der Premiumanbieter Repower“, so der Bericht.

REpower wird zu 100%er Tochter von Suzlon

Die FTD berichtet weiter, Suzlon habe sich auf der Hauptversammlung die Komplettübernahme Repowers genehmigen lassen. Zurzeit hält Suzlon etwas „mehr als 95 Prozent der Anteile, die verbliebenen Kleinaktionäre drängt er nun in einem sogenannten Squeeze-out aus dem Konzern. […] Um Produktionskosten zu senken, soll REpower künftig [.] Suzlon-Standorte in Indien nutzen,“ so der Bericht.

Mauritius top destination for Indians investing abroad; Germany loses attraction

By: Rajnish Tiwari

According to a recent report appearing the Hindu Busines Line (6th Sept. 2011) Mauritius has emerged as the top desitination for Indian foregin direct investments. The official data suggest that Indian FDI outflows to Germany have gone down by as much two-thirds…

„Mauritius has again emerged as the hot destination for Indian corporates investing abroad. The US and Singapore seem to be loosing their attraction.

„The Finance Minister Mr Pranab Mukherjee, in a written reply in the Rajya Sabha on Tuesday, said that Mauritius, the US and Singapore have regained the top three places in attracting Indian capital but with one difference. Mauritius has registered very healthy growth, but investment in the US and Singapore has come down in comparison to the previous year. United Arab Emirates (UAE) has also registered positive growth, but investment in the Netherlands has come down to half while to Germany it is down to nearly one third.“ []

(Read the complete report on the Hindu Business Line)

It must, however, be noted that a significant portion of outward FDI projects of Indian firms takes place by roping in subsidiaries already located aborad so that those investments are not necessarily captured by official data. Moreover, it is not improbable that a significant portion of the FDI to Mauritius is actually routed further to other countires in order to take advantage of favourable taxtaion treaties. Nevertheless, we cannot deny that Indian investments to Germany have, in recent past, neither kept pace with the overall development of Indian outward FDI nor with the growth level of the Indo-German bilateral trade relations. Nonetheless, the investment activity has remained encouraging, the offical figures not withstanding.

On the issue of recent developments and challenges in Indian outward FDI to Germany also see:

Tiwari, R. (2011): Investment Destination Germany: Chances & Challenges for Indian Firms, in: Business Guide Germany India 2011/2012, pp. 96-97, Berlin: Wegweiser.