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The world makes a beeline to India

The main areas that are targets of overseas investment are the tech sector and the galloping telecom industry.

india Updated: Mar 08, 2006 13:08 IST
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Americans, Europeans, Koreans, Japanese and even Chinese are making a beeline towards India either to buy stakes in local firms or to raise capital through its booming stock market to fund expansion.

The main areas that are targets of overseas investment in Asia's third-largest economy are the booming tech sector that depends on the growing tribe of low-cost, English speaking workforce and the galloping telecoms industry.

Several global firms at the Reuters Global Technology, Media and Telecoms Summit, held simultaneously in Hong Kong, Paris and New York, said they were keen to take a slice of the $700 billion economy, forecast to grow at a sizzling 8.1 per cent this fiscal year.

"India is very exciting. IT developments are a national pride. I think that we are doing extremely well (there), but a consolidation would help us," Paul Hermelien, chief executive at Capgemini, said in Paris.

"We are talking to several Indian companies."

Capgemini, Europe's largest computer consultancy, employs about 4,000 people in India.

Smaller European rival Atos Origin is also planning acquisitions in India's globally feted technology sector to boost growth. It is in talks with several companies.

Atos plans to increase its staff in India to 2,500 by the end of the year from 1,500 now. This 67 percent jump excludes any potential buyout of an outsourcing firm.

Computer services provider Electronic Data Systems Corp is eyeing medium-sized Indian technology companies that could deepen its offerings to customers.

"We see off-shoring as a major offensive weapon," EDS co-chief operating officer Steve Schuckenbrock said in New York.

Global firms such as General Electric have long made India's $17.2 billion software sector a base of outsourcing IT services.

Beats China

India's red-hot wireless services market, which has overtaken China in terms of net monthly additions, has become both a source of capital and a magnet for investment.

Ports-to-telecoms powerhouse Hutchison Whampoa Ltd plans to list its Indian mobile services operations this year to fund expansion in the world's fastest growing wireless market.

"It's an early-stage market," Managing Director Canning Fok said. "We're bullish."

That news, and its plans to restructure its Indian mobile operations, drove shares of Hutchison Telecommunications International Ltd. 0.8 per cent higher early on Friday following a nearly 9 percent jump on Thursday.

The much-awaited IPO could rake in up to $500 million for expansion.

India added a record 4.7 million mobile users in January, taking its total wireless user base to more than 81 million. This exceeds the combined population of France and The Netherlands.

There is still room for growth sine tariffs are the lowest anywhere and only 8 percent of India's billion-plus population have access to mobile services.

As soaring growth takes root, the cellular market is set to become the world's third largest by the end of this year, trailing only China and the United States. Carriers are expanding networks in untapped rural areas where two-thirds of the population lives.

To soak up such demand, handset giant Motorola is planning to set up a phone manufacturing unit in India as it takes a shot at the second rung in the domestic market behind global rival Nokia.

"We came from a very small market share. We have stepped up our efforts ... we have made it (India) the headquarters of our high growth markets," said Simon Leung, Motorola's senior vice president for Asia. "We should be number two in no time."

Nokia is already setting up a plant in India, and South Korean rivals Samsung Electronics Co. Ltd. and LG Electronics Inc. already produce handsets in the country.

"The market is really growing a lot faster than expected," said Chu Woosik, senior vice president of Samsung's investor relations.

More than 50 million handsets are expected to be sold this year in India, compared with 34 million last year.

"The mobile penetration is quite low compared with other countries, so we see a lot of potential in India." said Hu Yong, vice president at Chinese telecoms equipment maker Huawei Technologies.

"We are increasing our investment in the India market."