Their oyster, with grit attached Cross-border deals involving Indian firms have been more famous than profitable

Made in India

IN THE SOUTHERN state of Kerala earlier this year a treasure was discovered in a temple. Hidden in secret vaults for hundreds of years, it is thought to be worth many billions of dollars and includes coins from the Roman empire, Venetian ducats, 16th-century Portuguese money, 17th-century Dutch East India Company currency and even the odd nugget or two from Napoleonic France. “The find is like an economic history of India unfolding,” says Gurcharan Das, a writer and former boss of Procter & Gamble in India. For most of its history the subcontinent was open to trade and the outside world. The insularity and protectionism of the 1947-91 period was, he says, “an aberration”.
When it comes to trade, India is still not as open as China. Exports, and not just software and outsourcing, are however growing fast and there are signs that India is gaining traction as a manufacturing centre. Bajaj Auto, a family firm, for example, exported almost 1.2m motorbikes and three-wheelers in the year to March 2011, with about half going to Africa and the Middle East. For all that, though, most Indian firms are making their mark not by trying to be the workshop of the world, but by aspiring to be multinationals: active, in control and physically present in lots of countries, doing everything from development and manufacturing to branding and distribution. They are doing all this far earlier than firms in other emerging countries would dare.

In this special report

• Adventures in capitalism
• The Bollygarchs’ magic mix
• »Their oyster, with grit attached
• The limits of frugality
• The power and the glory
• Looking for the next Infosys
• Rolls-Royces and pot-holes

Sources & acknowledgementsReprints

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• India

Indian bosses, a sophisticated and worldly bunch, have a huge cultural head start, as anyone who has witnessed a Chinese state-owned firm trying to charm the outside world can testify. They are sometimes said to have other advantages, too; Indian firms can handle diverse workforces, for example, since they already do at home. The most breathless strain of this argument is that if you can make money in India you can make it anywhere. Indian firms, it follows, are destined to rule the world.
That last claim is silly. Indian firms also face formidable disadvantages. One is their size: they are middleweights by international standards. Their fiddly holding chains make it hard for them to pay for things by issuing shares, and their cashflows can be thinly spread across many subsidiaries. Raising debt in India to buy things abroad is expensive, with base interest rates approaching 9%, and difficult because the central bank frowns upon it. Indian firms raising funds abroad are hobbled by the country’s poor credit rating. India does have large foreign-exchange reserves, but these are not recycled as cheap foreign-currency loans to fund corporate adventures, as they are in China. T.C.A. Ranganathan, the boss of Export-Import Bank of India, a state body aimed at financing trade, says it simply does not have the same risk appetite as its Chinese equivalents.