INDIA has always been at the frontier of economic globalisation. Just look around and you will realise that many of the brands you use daily are either of foreign origin, or owned by foreign companies based out of India. Similarly, many of your closest friends and family members work for foreign firms or MNCs, as they are collectively referred to. And in many cases, these foreign companies' history in India is longer than the history of Independent India.

If that is the case, why are we talking about India Inc's globalisation in this edition of ET500? This is because the nature of globalisation has undergone a 180-degree transformation. While in the past, globalisation was a one-way street dominated by western firms with Indian companies participating in it as fringe players, now the street is becoming a two-way thoroughfare. Indian companies are no longer content with being junior partners in this exchange; they now want to have a say in the nature of exchange.

Partners In Progress

In the past, Indian companies participated in globalisation as exporters of low-cost manufactured goods or technology seekers or at best, local partners for MNCs setting up operations in India. However, the same companies now find these age-old practices stifling and growth-inhibiting. Nowhere is this paradigm shift more visible than in the automobile sector. Till a decade ago, the domestic auto market - especially the two-wheeler and passenger car segments - was dominated by Indian-MNC joint venture (JV) companies. Now, most of those JVs have dissolved, not because they were unsuccessful, but because their erstwhile Indian partners found these JVs restricting. Most of them now have the wherewithal to go solo in India in terms of technology, financial depth and market understanding. Moreover, many home-grown auto makers, including Tata Motors, Bajaj Auto, TVS Motor and Mahindra & Mahindra (M&M) now consider themselves as emerging global brands and are in various stages of establishing a global footprint. Tata Motors' trucks and buses are now a common sight in Africa, Asia and Latin America, while M&M's tractors are becoming ubiquitous in farms across North America, central Europe and China. In the motorcycle segment, Bajaj Auto and TVS Motor are already names to reckon with in Latin America, many parts of Africa and South-East Asia.

Whatever doubts remained about the global ambitions of desi automakers have been put to rest by their recent acquisitions. The most talked-about among these was Tata Motors' acquisition of Jaguar-Land Rover (JLR) for $2.3 billion earlier this year. For many sceptics, it was a prestige buy by a third-world car maker, but for the company, the luxury marquee is the missing piece in its global product portfolio. This becomes clear if you combine the JLR acquisition with Tata Motors' acquisitions in other segments. These include its acquisition of Daewoo Commercial Vehicle (high-end CVs) and 21% stake in Hispano Carrocera SA (luxury inter-city buses), among others.

A similar strategy is being followed by other domestic automakers. For instance, M&M is setting up its global footprint in the tractor segment through JVs, acquisitions and greenfield facilities. Bajaj Auto has picked up 30% stake in an Austrian sports bike maker, while tying up with local partners to establish a direct presence in South-East Asia, Nigeria, Iran and Latin America.

All these activities have led to a change in the world's perception about Indian automakers. While in the past, Western firms treated their Indian counterparts at best as a candidate for local JVs, now these very firms are seeking out Indian companies for joint product development (Bajaj Auto-Renault JV for developing a competitor to Tata Nano), entering new segments (Ashok Leyland-Nissan JV for manufacture and sale of light CVs and powertrains) or for worldwide strategic tie-ups (for instance, Tata Motors' tie-up with Fiat of Italy).

Global Scale

A similar transformation is visible in companies manufacturing commodities or B2B products. While in a consumer-led industry such as automobiles, technology, brands and distribution provide the competitive edge, in commodities and B2B segments, scale and cost competitiveness matter the most. And this is what Indian companies are looking at while going global. Take Tata Steel, for instance. As the Indian economy opened up and changes in communication and transport technology erased geographical protection, the company realised its days of being just another successful steel maker sheltered in a developing country were over. Now, post three acquisitions, including the $12-billion buyout of Corus, Tata Steel is the world's sixth-largest steel maker, compared to 56th rank two years ago. Its manufacturing assets now straddle across Europe, North America, China and South-East Asia. Tata Chemicals has followed a similar strategy to emerge as the world's second-largest soda ash maker with access to two of the world's best sources of natural soda ash. In the non-ferrous segment, Vedanta Group has emerged as one of the world's top producers with manufacturing and mining assets in India, Zambia and Australia.

New Faces

Finances aside, the biggest influence of globalisation has been on the way India Inc conducts its business. From hiring and retaining local employees, the HR departments of companies are now geared up to groom and retain global managers. And the same factors that were considered as handicaps in hiring and retaining global managers - Indianness and family business - are being used as the USP to retain talent in foreign markets. For instance, nearly half of the top managers at Tata Steel and Tata Communications are expat. As Alan Rosling, Tata Sons' executive director, says, "Thanks to this country's history and culture, Indians find it easy to assimilate with new cultures. This places Indian companies in an advantageous position."

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