CIOL:CII-Infy launch plan to build 100 billion $ MNCs

CII-Infy launch plan to build 100 'billion $' MNCs

The plan will create an ''ecosystem'' that will enable aspiring Indian companies in the next 10 years to accelerate their growth as successful next-generation billion $ MNCs

Wednesday, October 18, 2006

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NEW DELHI: 'Towards 100 Indian "Billion $" MNCs - a joint programme of the Confederation of Indian Industry (CII) and Infosys - was launched at the National Conference on Globalization - Emerging Indian MNCs in New Delhi recently.

The plan will create an "ecosystem" that will enable aspiring Indian companies in the next 10 years to accelerate their growth as successful next-generation billion $ MNCs.

Kamal Nath, Union Minister for Commerce and Industry, welcomed the initiative in nurturing Indian MNCs. "The changing scenario in India is the result of the growing global competitiveness and demographics," said the Minister.

Nath said that WTO involves not only trade issues but also investment issues. Rules and regulations need to be chalked out for cross-border investments and synergies built in to increase outward investments. "Countries like India will have far more spenders and savers compared to many European countries," he declared. Aspiring MNCs also need to prepare the Indian government for future investments and business, he said.

SD Shibulal, Co-founder and member of the Board of Infosys Technologies Limited, who is leading the initiative, and MD Ranganath, also from Infosys, said the Plan aims to share practical experiences of successful Indian MNCs; introduce global best practices; involve knowledge partners; and finally, nurture aspiring MNCs.

Shibulal said CII and Infosys have received an overwhelming response to the programme and companies like the ICICI Bank have already shown interest in partnering with them. There are 37 companies in India with a turnover of over US $ 1 billion. The programme aims to explore the potential of leveraging their experience. The successful companies, will help in 'mentoring' the aspiring 100 billion $ companies.

According to a CII- CRISIL report, Indian firms are on an aggressive buying spree abroad as part of the strategy to establish 'Brand India' across the globe. The buyers are spread across a wide spectrum of industries ranging from pharmaceuticals to telecom, automobiles and ancillaries to IT with a varied geographic span across US, Europe, Africa, China and the CIS countries.

The report says RBI has progressively relaxed the controls on outbound investments, making it easier for Indian companies to acquire or invest abroad. Global investment flows rose from US$ 334 billion in 1995 to US$ 1.3 trillion in 2000. By 2003, Global FDI inflows fell to US$ 633 billion while during 2004 Global FDI inflows increased marginally to US$ 648. However, FDI outflows rose significantly to US$ 730 billion in 2004 from US$ 616 billion in 2003.

Market distortions such as high import tariffs, regulatory regimes, and complex clearance procedures are the critical drivers behind oversees investments along with access to low cost resources and market access.

According to the report, there are two aspects of 'linkage effects' of foreign direct investment that the literature highlights; technology transfer and local employment whose magnitude depends on the size of investments. Majority of Indian investments are relatively small in size and hence the linkage effects are small in comparison to that of developed economies.

DS Brar, Chairman, CII National Committee on Indian MNCs and Chairman, GVK Biosciences Private Limited, said there was tremendous growth potential for Indian MNCs. Change in domestic environment has propelled Indian companies to go global.

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