Globalisation is a much abused term. To many, globalisation means foreign companies starting manufacturing in India. To some, it means Indian companies forming joint ventures with foreign ones. To others, globalisation means exporting goods and services. But among all these definitions, one basic issue has got lost. If any company has to globalise, it has to operate globally. And while several foreign companies are investing in India, not too many Indian companies are investing abroad.

The reasons are many. First, the Government has not looked kindly upon Indians investing abroad. In any case, not many Indian companies have tried as they felt there was enough scope of investment within. And finally, most of the few who tried to dabble in ventures abroad failed.

The Government seems to have recognised the fact that investing abroad is important for a company's expansion and growth plans.

Now it has allowed corporates to freely invest up to $ 15 million raised through export earnings without taking permission from the Reserve Bank of India. At present, fast track clearances of up to $ 4 million are given for investment abroad.

Under the liberalised overseas investment guidelines announced, corporates have also been permitted to invest abroad a maximum of 50 per cent of GDRs to be raised.

The twin moves are to encourage corporates to globalise and also to move towards capital account convertibility.

India's investment abroad have increased in the last few years, but they remain a fraction of what other Asian countries are investing abroad. According to UNIDO figures, outward flow of FDI to industrialised countries from India rose from $ 180 million in 1985 to $ 707 million in 1993. But China increased it from $ 131 million to $ 7.4 billion. With the Government becoming more relaxed about spending foreign exchange, Indian companies will not find it easier to invest abroad.

Gaining an edge

An example of an Indian company investing abroad to fight competition is Videocon. According to reports, it is planning to increase its stake in an Italian company Necchi Compressori to 50 per cent from 25 per cent. Necchi is the world's leading maker of compressors. Videocon had invested $ 6 million in 1996, and now has received RBVI permission to invest another $ 5.7 million in the company. This will give Videocon access to the latest technology at cheaper prices. Some technologies will be transferred free of cost.

Chip on the shoulder

After Bill Gates, it is Craig Barrett. The latest IT CEO to visit India is the chief of Intel Corporation, the world's best known and leading chip maker. Intel's Pentium processor has become a brand in itself in India, with most computers being defined by their chip. Barrett did not get the kind of response, Gates got, because he is not the richest man in the world. But his company is as important to the IT industry worldwide as Microsoft. Intel will invest $ 100 million in its Indian subsidiary. While there are no plans to manufacture chips in India, Intel will spend a lot of efforts in computer education. Barrett said that India could not progress until it made substantial investment in information technology. But Gates had already told us that.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.