India goes shopping for firms in West

Indian companies are snapping up their rivals in the West at an unprecedented rate.

The £4.3 billion ($12.3 billion) offer from India's Tata Steel accepted this month by the British steelmaker Corus is just one of many deals taking place. According to research by consulting group Accenture, Indian companies will make more than 180 acquisitions in Europe and the US this year - up from 130 last year.

Accenture estimates that Indian companies could be buying nearly 370 companies a year in the West by the end of the decade.

Mark Spelman, the strategy leader at Accenture, said: "As India and China become more powerful they will ... look outward rather than inward."

One result will be more Indian entrants in the Fortune Global 500 index of the largest companies in the world. Currently, six Indian companies, most in oil, are in the list. Accenture expects that number to grow to 12 by 2010.

This is quite a transformation for a country that until a couple of decades ago exported only tea and cotton.

In Calcutta, businessmen talk with no apparent boastfulness of the coming age of "Indian multinationals". This is the hometown of another Indian with a reputation for buying Western businesses, Lakshmi Mittal - and others are already following him. Shishir Bajoria, who recently bought a steel firm in Doncaster, UK, celebrated by dressing in traditional garb for an hour-long Hindu ceremony.

Behind the improved climate for multinational business has been a big change in the attitude of the Indian Government. Businesses used to complain about the "licence Raj", a combination of red tape and semi-official slothfulness that acted as a kind of corporate bromide, deterring many companies from making any sort of move.

Until two years ago, any Indian business looking to expand abroad was tightly fettered by national law. "Today it's as easy as a British company buying another British company - or an Indian company doing a domestic takeover. Now, any Indian able to do so can spread his wings."

Even small businesses are going multinational. Manoj Mohanka thinks his small firm may be the first of its size to buy overseas. He recently took over a defence-electronics firm in Cambridge and wants to take on the likes of Motorola and "create a global brand in this niche".

Having a UK address lets Mohanka reach markets an Indian headquarters can't - including Pakistan.

For many companies the UK is a natural destination. Thanks to colonialism, Indian accounting and legal systems are close to those in the UK and English remains the language of the business and political class.

Spelman says: "Employees in the UK should start asking themselves what it will be like to work for an Indian employer."

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