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Shape up or we'll ship out
Highlights
It is not only decline of foreign investments but also the flight of domestic companies that India has to worry about. With rapid slide in the rupee this year, the message from the country's corporate titans to the government is clear: shape up and fix the problems or more companies will expand their business abroad and deprive the economy of investment.
India Inc warns govt that more companies will go abroad
If India had better infrastructure and more availability of power I may not have gone abroad. We don't have enough power; we don't have enough water - Kiran Mazumdar-Shaw
It is not only decline of foreign investments but also the flight of domestic companies that India has to worry about. With rapid slide in the rupee this year, the message from the country's corporate titans to the government is clear: shape up and fix the problems or more companies will expand their business abroad and deprive the economy of investment.
Many entrepreneurs like Kiran Mazumdar-Shaw are already doing just that. Ranked by Forbes as one of the world's most powerful women, she is investing about $200 million in a manufacturing plant in Malaysia for her biotechnology firm Biocon Ltd to offset unreliable power and water supplies back home. It already makes more than half its sales overseas.
"If India had better infrastructure and more availability of power I may not have gone abroad," says Shaw. "We don't have enough power; we don't have enough water. So some of these projects where we need water and power, I will do it in Malaysia because that's where it is abundant."
Shaw, who is ranked 92 in India's rich list with a net worth of $625 million, is one of several top entrepreneurs voicing frustration that policymakers failed to keep economic reforms rolling over the past decade, which they contend would have prevented India from stumbling into its deepest economic crisis since 1991.
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The economic cost is underlined by Indian Inc's overseas direct investment. Including bank guarantees issued to overseas units, it stood at more than $21billion during the seven months of this year, up 38 per cent from the same period of 2012. That is set to increase as Indian companies see the advantages of diversifying globally.
Yusuf Hamied, the billionaire chief of Cipla Ltd, which in July completed the acquisition of South Africa's Cipla Medpro for about $460 million, is expanding his company's base in Algeria and Morocco as part of a North Africa thrust. Aditya Birla Group, the $40-billion diversified conglomerate that gets more than half its sales from overseas operations, plans to invest $1 billion setting up a chemical plant in the US, local media reported last month. (Reuters)
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