Finding regional hubs for the corporate juggernaut
Nitya Varadarajan & Anuradha Ramachandran
CHENNAI, January 13: While India has been seeking foreign investments to perk up its economy, there have been some foreigners who are been looking at India to help boost theirs.Which should come as a surprise only to those who equate `foreign' with `western'. Sri Lanka, Tanzania, Uganda, Egypt and Bahrain - all growing economies with a wealth of resources that require to be tapped, are just a few of the newly emerging economies where the `Made in India' label is not without muscle. They believe that India is a power to be reckoned with, whatever Moody's may say. They feel that India can contribute tremendously to their growth and development and also gain in the bargain. The expectations are clear and simple. They are looking for investments and expertise in manufacturing, trading and most importantly, training.While in manufacturing the focus would be on light engineering, auto components, machine tooling as also hardware and software, these countries are also looking at being regional hubs for trade
of consumer goods with a `Made in India' label. But training is the surprise sector which holds immense possibilities. These countries are mainly looking at such segments like software, and EDP (Entrepreneurial Development Programmes) and follow up management skills. All the countries have embarked on economic reforms. Almost all the above countries are consolidating and extending reforms in the financial sector, removing barriers to private investment, liberalising external payments, going ahead with trade reforms. Sri Lanka, Tanzania and even Uganda are all promising total investor protection. All countries have 90-plus literacy levels. And all offer potentially big markets. Take Tanzania. It earns $ 805 million from exports. However it imports $ 1772 million worth of goods. The imports are in the area of machinery, transport, equipment, metals, beverages, clothes, paper, food, petroleum, pharmaceuticals and hospital equipment. Currently trade flow from India to Tanzania is just $150 million.
Recently Tanzania discovered deposits of gold, new deposits of diamonds, nickel and cobalt. The mining industry has been liberalised and investors from South Africa, Australia and Canada are coming in to this sector. Tanzania also has United Kingdom, Germany, Italy and Japan as its main trading partners. India however is yet to mark its presence. J V Mwapachu, President of the Confederation of Tanzanian Industry said that gems processing and jewel making India could take the lead - utilising the Tanzanian deposits. With the Tanzanian climate being ideal for sugar cane, the country would like to see more sugar mills from India - not to mention capital equipment manufacturing industries, machine tools and other engineering industries. ``India's technology is very good and is not as expensive as the west,''Mwapachu felt. Indian investments have not been significant. RITES India has been assisting Tanzania Railways corporation in terms of consultancy management support services. TCIL got a $ 12.5 million ADBfunded contract for installing telephone lines, equipment. Tata Exports have set up a subsidiary for trade. Tatas have also purchased controlling shares in Light Source Manufacturing Company, Avon Cycles has purchased NABICO, a Tanzanian company and the NIPHA group of Calcutta is setting up a cotton ginnery in Tanzania. The story is similar in Uganda. Though earlier many foreign investors, Indian and others, burnt their fingers in the country's civil war, now that Uganda is a member of the Multilateral Investment Guarantee Agency (MIGA) foreign investors are able to insure their investments before they get on the ground. Currently the concentration is on processing natural resources like in agriculture, forestry amd mineral resources. Bahrain is another country which would like to see Indian industry have its base in its oil rich homeland. Bahrain does not levy any corporate tax in companies setting up base in the country, there are no personal taxes on employees, hunderd per cent repatriation of
profits and capital are allowed and corporates can set up wholly owned subsidiaries. Bahrain's proximity to the other prosperous Middle east economies is another bonus factor. Another industry which offers tremendous potential is trading and distribution. Many consumer goods and commodity companies have expressed interest in setting up regional cenntres in Bahrain as a base for all trading activities in the Middle east. Egypt, a healthy, growing economy with a per capita income of $ 700 and reserves worth $ 22 billion, was looking for joint ventures between the two countries in the areas of software engineering and automotive components.Egypt was open to purchase of capital equipment, technical transfers, joint ventures from India or any other mode which would enable the country acquire expertise in engineering. Egypt is planning to export auto components to Europe and this is an avenue of opportunity. Egyptians are already talking to Indian manufacturers like Maruti to set up component units. EgyptianCEOs are well on their way to signing up deals with Electropneumatic in Mumbai and NTTF Industries in Bangalore and Lumax. Sri Lanka needed light engineering industries, processing industries for rubber and graphite, gems and jewelry, food processing and others, said C V Gooneratne, industries minister of the island nation and invited Indian industry to explore opportunities in these areas. Because it had embarked upon liberalisation in the 70s, it already has considerable presence from MNCs from Japan, US, UK, Sweden etc - like Shell, NTT, Pacific Dunlop, Morrimora Brothers. From India the investments were from Bajaj, Ashok Leyland, Ceat Tyres and Godrej, but Sri Lanka could do with much more, the minister felt. The most striking point in all this is that the countries are not looking for investments from giant conglomerates with hundreds of billions at their disposal. Though these would no doubt be welcomed, the opportunities are as much for the medium and small scale enterprises. The investment
levels range between $ 1 million and $ 50 million. Other main factors for considerations are manpower deployment (read employment opportunities) and forex revenue from exports and trading.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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