‘Prosperity drives India’s global competency’
Mike Rake, chairman, KPMG International, speaks on India Inc’s growth story and the challenges ahead.
By Noemie Bisserbe, TNN |
What do you think has changed over the last five years that has enabled Indian companies to emerge on the international scene?
Over the last few years, Indian companies have significantly benefited from liberalisation. Progress in investment, increase in demand and in purchasing power of the consumer class in the domestic market, have also contributed to Indian companies’ global competitiveness. India has gained more credibility and have thus been able to access foreign debt and equity in foreign market. India’s ambition to participate in the global economy has also been a driving force. Indian companies have been able to identify possible synergies between Indian and global companies and their ability to create global compatibility has served them well.
Which Indian companies do you feel qualify best as multinational companies?
Many Indian companies can qualify as multinationals. I could not name all of them, but to name a few, Tata, Infosys, ICICI Bank, HDFC Bank, Wipro and Satyam Computer Services.
For a company to qualify as multinational, what share of sales should come from international business?
There is no such criterion according to me. If your competitors are global, if your customers are global, then you are a global company.
In which sectors do you expect to see an increasing number of significant global acquisitions?
We can expect more acquisitions in any sector where Indian companies have important global capabilities and can offer a value proposition. Steel and pharmaceuticals are some of them.
What major challenges are Indian companies acquiring assets abroad, likely to face?
Companies and not specifically Indian companies, acquiring assets abroad are faced by a diversity of issues. They need to integrate their new work force, comply with local regulations and social security norms. They are also confronted to considerable political issues.
How would you compare Indian companies to those of other emerging countries?
Brazilian companies have stepped up on the international scene recently, although they have not been as aggressive as South Korean companies, for instance. Russia is yet another country, which has completed many sizeable acquisitions lately. However, India starts with a clear advantage: language. In addition to this, educated Indians are also more often than not, international people. This gives India a clear advantage over most other developing countries . Non Resident Indians are also a major asset for corporate India . People in the UK and the US are used to working with Indians, many Indian businessmen are on the board of major global companies . And from the UK, Indian companies have been able to bridge to Europe.
To what extent do you believe India’s economic boom is sustainable?
Many issues still need to be addressed. Infrastructure, notably roads and railways still require considerable improvement. There is an urgency to address social issues, address issues such as education , healthcare, power and water. At some point of time, this growth will not be sustainable, from a social point of view.
Do you feel that it has recently become more difficult to do business in the US?
With the plethora of regulations that has recently come up, it is definitely becoming more difficult to do business in the US. The legal environment is becoming more difficult; it varies from state to state too. Cost of compliance is increasingly dramatically as well as the cost of litigation. This has a negative impact not only on business , but on consumers as well. Few companies want to list on stock exchanges in the US, as they feel that easy access to capital is not worth enduring scrutiny and sky rocketing costs.
Russian companies for instance are now listing in the UK instead. New York Stock exchange is suffering as against to London and Honk Kong. The euro has also created a pool of liquidity in Europe. Bombay and Shanghai exchanges should also benefit from this trend and could attract an increasing number of international companies. However, around the world, in spite geopolitical issues , huge imbalance, uncertainty, the global economy continues to grow. And, we become more resilient, better at managing economical cultural and political issues.
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