'It's best time to do business in India'

WASHINGTON: With Indian business going from local to global, this is the best time to have a business in India and learn how to do business around the world, according to Finance Minister P Chidambaram.

"Mature, confident, strong, responsible, hungry for growth, and ready and willing to be among the best in the world" - that's the new face of Indian business, he said, delivering the year's first Wharton Leadership Lecture at one of America's top business schools.

"Ask any businessperson, and he or she will tell you that this is the best time to have a business in India and also find your way to do business in other countries of the world," said Chidambaram Wednesday at the Dhirubhai Ambani Auditorium of Wharton School, University of Pennsylvania, Philadelphia.

Recounting the India growth story, the minister said what changed everything for Indian business was the shock of liberalisation in 1991 when Indian business was put on notice that the earlier model directed by a central authority would make way for an open and competitive economy.

Indian business has responded to the changes with remarkable agility and speed, he said, noting that one of the consequences of a fiercely competitive market economy is the need to remain close to the market and to retain market share.

"There is no room for sloth or inefficiency. Growing the market share and remaining close to the market are the principal factors driving Indian business from local to global."

Besides, many Indian companies are led by technocrats, said Chidambaram. "They are driven by innovation. Any business driven by innovation, in order to keep its competitive edge, has to secure a global presence. Indian companies in the fields of information technology and biotechnology are taking that road.

"There is also the desire to be the best or among the best in the world," he said, citing a recent BusinessWeek report that India's moment is evident and that Indian outfits dominate this year's list of Asia's top 50 companies.

"There are a dozen companies in the list ranging from automakers to a mortgage lender to pharmaceutical producers. The report concluded that the Indian companies represented have plenty in common: smart management, low costs and - increasingly - aspirations to join the elite ranks of multinationals."

The India growth story has also helped, said Chidambaram, noting India's GDP has been growing, on average, at the rate of 8.6 per cent since 2003-04 and "Corporate balance sheets are larger and corporate profits are higher, giving Indian businesses the financial muscle to take on new challenges."

Till 2005-06, Indian firms' outward investment was very modest. In that year, the outward investment was $2.9 billion. In the next year, 2006-07, it shot up to $11 billion. Foreign direct investment flows into India also shot up to a new high of nearly $20 billion in 2006-07, he said.

Citing a Federation of Indian Chambers of Commerce and Industry (Ficci) study of 307 overseas acquisitions by Indian companies between 2000 and 2006, Chidambaram noted 28 percent of the acquisitions with a total estimated value of $20 billion were in the IT/software/BPO sector.

This was followed by healthcare and pharmaceuticals, automobiles and chemical fertilisers. Of the acquisitions, 32 percent were in the United States, followed by acquisitions in Britain and the rest of Europe.

"The acquisition urge has seized both big and small Indian companies," he said, noting that not only manufacturing companies and service providers, but also smaller firms doing contract research have coveted overseas opportunities in areas such as clinical research, bio-equivalence and data management.