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October 23, 2006

Going global: At what cost?

As Indian companies forge ahead with mega acquisitions overseas, Forex expert A. V. Rajwade striks a note of caution via his Business Standard column. He provides examples of other cross-border acqusitions - Lenovo's acquisition of IBM's PC business and BenQ's acquisition of Siemens' mobile handset manufacturing plants in Germany - which have not provided positive results for the acquirers.

Quite possibly, India’s outward direct investment could exceed the FDI inflow in the current fiscal year. And, we are supposed to be a poor, capital hungry country! Clearly, a huge amount of our risk capital seems to find the climate abroad very attractive, even as intending foreign investors in India continue to be deterred by our labour laws, our bureaucracy and our infrastructure. While lauding the entrepreneurial instincts of the Indian businessmen, I am not quite able to overlook certain recent cases of developing countries taking over businesses abroad.

Arun Natarajan is the Founder of Venture Intelligence, which tracks private equity and venture capital in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.