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EICC Study Report on Indian Companies in EU 21032013.pdf


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BACKGROUND
This study has been commissioned in the background of the emergence of Indian Multinational Corporations, many of which
have impressively transformed themselves and vibrantly embraced globalization to integrate in the global economy. Recent
acquisitions by Indian companies in Europe provide ample evidence of the growing urge to expand reach beyond domestic
markets. However, the surge in Outward Foreign Direct investment (OFDI) by Indian firms gives rise to a host of novel situations
and raises interesting questions. While there have been keen debates on allowing FDI in different sectors of the Indian economy,
there has been little public discourse on the quantum of investments made by home-bred companies in overseas markets
Today, Indian companies are investing large enough sums to stand respectable in comparison to foreign capital inflows. This is
quite unprecedented as India has historical been a recipient of foreign funds. In addition to capital, the country has always been
a net importer of technology and know-how.
Till few years back, it was unthinkable to discuss the contribution of Indian companies to the fiscal health of Europe. However,
drastic changes in the global economic and financial scenario mean that Europe now needs large dollops of inwards direct
investments.
Indian companies have been making their presence felt through greenfield investments and landmark acquisitions that have
been successful on all major counts. Indian brands have proven their global competitiveness by expanding into new territories.
However, there is a growing perception in the West, particularly Europe, that Indians are taking away local jobs. EICC believes
that investments by Indian companies in Europe have boosted the local economies to wade through the debt crisis. Hence it is
important that a greater sensibility and awareness is created amongst politicians and businesses in the continent.
The Report will serve as a valuable resource for information, statistics and analysis pertaining to Indian investments between
2003 and 2012. The Report also makes some interesting projections about future outlook on investments and job creation by
Indian entrepreneurs. It also spells out ways in which Indian and European companies can partner together in order to create
more value and boost consumption at the EU level.
We have tried to highlight concerns faced by forward-looking business leaders in Europe and India. The findings contained
herein will help policymakers in taking informed decisions to address the economic and social aspects of Europe-India relations.
While the endeavour has been to put trade and investment practices into perspective, the Report does not seek to identify
fault lines in EU’s policies. Given the current climate of uncertainty, the Report explains why it is important to make the EU-India
economic cooperation “inseparable”.

FOREWORD
It is with pleasure that I introduce to you the Research Study Report entitled “Indian Companies in the European Union:
Reigniting Economic Growth” carried out by our Europe India Chamber of Commerce (EICC). The Report goes beyond its purpose
and objective of being a mere research paper, but serves as a valuable resource on India’s emerging multinational enterprises,
and provides insights into the patterns and trends of their emergence in the global FDI market. The Report also aims to create a
better understating of Indian MNCs and their role in Europe’s economic development.
This Report is unique as it offers a comprehensive review of the potentials of Europe-India trade and economic relations. The
rising presence of Indian companies in Europe is just one part of the economic relations. The Study reveals several interesting
aspects of Indian investment in Europe when both the EU and India are in the advanced stages of inking a bilateral trade and
investment agreement (BTIA). This agreement will be a watershed moment in the history of the trading partners, as it will open
up previously uncharted avenues of trade and investments.
The remarkable transformation of Indian MNC’s has altered business equation globally. The surge in outward foreign direct
investment (OFDI) by Indian firms during last few years is also raising a host of interesting questions. Today Indian companies
are investing sums large enough to stand respectable in comparison to the foreign capital flow to India. This is something quite
unprecedented as India is used to capital flow in one direction:Inwards. Traditionally India has been a net importer of capital
and technology.
The emergence of Indian multinationals as major global economic players heralds a new political and economic reality. There
is a perceptible shift in balance towards the East and India is as a key architect of this change. The kindling of entrepreneurial
and intellectual ability of the Indian business and corporate world have encouraged Indian brands to expand globally and
prove their global competitiveness – the Report reveals all these issues.
To our knowledge, this work is the first of its kind to be conducted by any Chamber at pan-European level.
Research on the subject of Indian corporate investments is of particular importance for policy-makers and social scientists
across Europe given the current economic environment in Europe. Inward investments are vital as European countries strive to
create substantive new jobs and increase economic competitiveness. Like any form of international trade, Indian investment in
Europe creates winners and losers and hence cause apprehension in certain quarters.
Our study has enabled us to set out and comment on India’s economic relationship with the major economies in Western
Europe, relating to both trade and investment; Indian multinational enterprises and their role in economic development and
job creation; Factors that could determine the future course of India’s economic relationship with the EU and its member states;
along with the author’s Policy recommendations.
I sincerely hope that the report will prove useful to a diverse readership of investors, businessmen and policy makers. I very
much hope that we shall be able to follow this in due course with a study of “European Companies in India”.

31 December 2012 Geoffrey Van Orden, MEP
Chairman
Europe India Chamber of Commerce

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