Indian MNC investments in international markets up by 100% pa: ISB Survey

With foreign assets growing by more than 100% p.a. in recent years and affiliates in over 70 countries, India is rapidly staking a claim to being a true global business power.
Survey released by the Indian School of Business (ISB) and the Vale Columbia Center on Sustainable International Investment (VCC) at Columbia University in New York is part of a long-term study of the rapid global expansion of MNEs from emerging markets, in particular from the so-called BRIC countries: Brazil, Russia, India and China. The survey establishes a baseline against which subsequent developments can be measured.

The emergence of multinational enterprises from developing countries is an inevitable byproduct of globalization, says Ajit Rangnekar, Dean, ISB. The long-term impact of such investments cannot be measured by taking snap shots of share prices during growth or recessionary times. We are delighted to collaborate with Columbia University on this study as the true story of growth unfolds only when progress is studied over a long period and is compared to MNEs in other countries.
Adds Karl P. Sauvant, Executive Director of VCC: Indian multinationals are new players in the world foreign direct investment market; together with their other BRIC counterparts, they are bound to transform it rapidly.

The report identifies 24 large multinationals and ranks them on the basis of their foreign assets. These 24 companies are among the largest outward investors from India and, in 2006, they jointly accounted for:24 Companies (among the largest outward investors from India) jointly accounted for:

USD 15.3 billion in foreign assets
60,000 in employees abroad
USD 12.7 billion in foreign sales
Eight of the 24 companies surveyed have foreign investments in IT, and five of the 24 in pharmaceuticals
441 foreign affiliates (branches, subsidiaries, etc.) in 75 countries

The leading company on the list of 24 was the state-controlled Oil and Natural Gas Corporation (ONGC), which accounted for 31% of the foreign assets on the list. It was followed by the conglomerate Tata Group, accounting for a further 27%. The Tata Group which includes Tata Steel, Tata Chemicals, Tata Consultancy Services (IT), Tata Motors and Tata Communications (telecoms), among other companies had the largest number of employees abroad, just under 25,000.
Although the ranking by foreign assets draws on 2006 data, the report goes beyond it to provide information about large Indian investments in 2007 as well. The largest brownfield investment (i.e., investment through a merger or acquisition targeting an existing company) in 2007 was the Tata Steel acquisition of Corus Group (UK) for about USD 12.7 billion, while the largest greenfield investment was by GAIL, formerly the Gas Authority of India Limited, which invested USD 4.2 billion in petrochemicals in Saudi Arabia. The foreign assets of Indias top MNEs could have doubled in 2007, given the large increases in outward investment in that year. Outward M&A deals alone surged to nearly USD 25 billion in 2007.

Future surveys will reveal whether the surge in outward investment by Indian multinationals is continuing at the same pace or is being moderated by the impact of the financial crisis in 2008. The results of the next survey will be published later in the year.

The survey was conducted in the framework of the Emerging Market Global Players Project, a collaborative effort led by the Vale Columbia Center on Sustainable International Investment.