India a case of reverse imperialism: Forbes

June 7th, 2008 - 10:19 pm ICT by IANS  


New York, June 7 (IANS) India is still labelled an emerging market, but the Forbes magazine has argued that the country’s economy has already emerged. And as the economy spreads its wings, its companies are turning to new international markets, perhaps beginning a reverse imperialism. For proof, the US business magazine lists not only the recent high profile acquisitions by Indian firms, but also facts such as four of the top 10 billionaires in the world are Indian, and that with an annualised five-year total return of 42.2 percent, India comes second after Brazil in terms of the growth of the world’s largest public companies.

In comparison, the growth percentage in Britain and the US are 17.1 percent and 11.1 percent respectively, indicating that the balance of economic power in the world is starting to shift, the magazine said in a commentary piece in its latest issue Friday.

The reason for this reversal of fortunes is that for established companies in the US and Britain it is difficult to grow as quickly as those expanding from nothing, as is the case for start-ups in India.

During the 18th century, when the British colonised India and started exploiting the subcontinent’s vast natural resources and to expand trade, tea became an important commodity and came to symbolise British colonial rule.

In a case of reverse imperialism, Tata Tea, part of the diversified Tata Group, bought Tetley, Britain’s largest tea company, in 2000. Tata Tea has since become the second largest tea manufacturer in the world by volume, surpassed only by Unilever, based in London and Rotterdam.

This March, in another example of British brands being picked up by an old colony, Tata Motors acquired Jaguar and Land Rover from Ford for $2.3 billion. Tata Motors hopes the acquisitions will boost its ability to be a “meaningful player” in the global market.

India’s monetary muscle is strengthened by a cheap domestic labour market and its companies’ high price-to-earnings ratios, the magazine quoted Tarun Khanna, a professor at Harvard Business School, as saying.

The author of “Billions of Entrepreneurs: How China and India Are Reshaping Their Futures and Yours” added: “Unlike China where companies are state- and government-led, in India, it is people’s own money.”

Now even smaller Indian companies are able to collaborate with bigger counterparts in other markets - even those in other former colonies.

Last week India’s biggest telecom firm, Bharti Airtel, called off merger talks with South Africa’s largest provider of cellphone service, MTN Group, because of disagreements over the deal’s terms.

Promptly, Reliance Communications, India’s second largest telecom firm, entered talks with MTN. The potential MTN-Reliance merger will result in over 100 million customers, a network larger than that of AT&T, the largest in the US.

The shared colonial past, actually, is an advantage for Indian companies, Khanna told Forbes. “Imperialism is laying the seeds of global chess with Indian companies naturally capitalising on their shared history,” he said.

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