India's largest drug company recently bought a pharmaceutical firm in Romania - part of a growing trend as Indian firms begin to scout for growth opportunities overseas. From New Delhi, Anjana Pasricha reports.
The Indian pharmaceutical company Ranbaxy says its recent acquisition of Romania's generic drug firm Terapia for $324 million will help it make inroads into the European market. It was the Indian company's third acquisition this month.
But Ranbaxy is only one among a string of Indian companies that have been buying overseas firms, in countries ranging from South Korea to the United States.
The trend began six years ago when India's Tata group bought Britain's famous Tetley Tea brand. The rush to go overseas increased massively last year after as the country's foreign exchange reserves swelled to more than $140 billion, and the government lifted most curbs on foreign investments.
The head of the economic policy group, RPG Foundation, in New Delhi, D.H. Pai Panandiker, says the quiet push overseas by corporate India indicates that Indian business has come of age since the government introduced free market reforms in 1991.
"Indian companies are now feeling they can produce quality goods, they can sell at international prices, they can also do the marketing part," Panandiker says.
"I think they have acquired a lot of confidence since 1991 when the reforms were introduced, and that put the Indian companies on their toes, and in the last 10 years they have restructured, they have done a lot of things to see they are of world class."
According to industry estimates, Indian companies spent close to two and a half billion dollars buying overseas firms in 2005. Some of these purchases have come in the information technology sector, others in such traditional industries as pharmaceuticals, automobile parts, telecommunications or other manufacturing.
The companies say they are making acquisitions to secure export markets, to acquire new technologies, or simply to expand. Roughly 100 have been bought so far.
For example, Bharat Forge, a maker of auto components, last year bought a similar company in the United States and Germany. Indian television maker Videocon bought a French television manufacturer operating in Poland, Mexico and China. Last July, the Tata conglomerate acquired the Pierre Hotel in New York.
Most of the acquisitions are not big-ticket purchases. Unlike Chinese companies, which have made deals running into billions of dollars, Indian companies are purchasing small overseas firms, and the average size of the acquisition has been about $30 million.
Nevertheless, says Panandiker, this is a sign that India is integrating with the world economy.
"It is an indication that Indian companies are going global, they now look upon the world as the market, not India alone, so it is a reflection of the very fact of globalization," Panandiker says.
Analysts say the overseas forays of Indian companies have been helped by a robust economy that has hugely increased corporate profits and stock valuations in the last two years.