Mr K.V. Kamath

K.R. Srivats
Preeti Mehra

New Delhi, May 5 India Inc would continue to expand its overseas footprint in the coming years on the strength of its “competitiveness” and increased opportunities for global buyouts, the new Confederation of Indian Industry (CII) President, Mr K.V. Kamath, has said.

“Pace of mergers and acquisitions (M&A) will increase. In the immediate term, it will be M&A in the global context. The reason is simple. It is not that domestic opportunity is shut. Domestic opportunities may not be as open as we would like it to be. But there are more opportunities abroad because global companies are under pressure,” Mr Kamath told Business Line soon after he assumed office.

Mr Kamath expects the recent trend of Indian companies going in for acquisitions abroad to continue. “This trend will continue. It is on one premise only — Indian industry is competitive. If Indian industry was not competitive and we were in a situation like 2002, there would have been no Indian companies to go out. You will not have the legs to go and nobody will receive you,” he said.

But today, he said, there was willingness to look at Indian companies because they are acknowledged as competitive and who can run their business properly. “Some of the large companies that have created the magic around the brand India name, I think, should take credit for this, whether it is Arcelor Mittal or a Tata. These have created the buzz as it were and opened the door for other Indian companies, which on their own are competitive,” Mr Kamath said.

On the impact the weak dollar and recession-like conditions in the US would have on Indian IT services industry, Mr Kamath said that he does not expect dire or serious impact on Indian services businesses.

“The recent numbers indicate that they (US) are not in recession. If you look at this quarter and the large stimulus package (cheques are in the mail, as they say), I would be a brave man betting that the economy will go down. That much of pump-priming is slated to happen, at least this quarter and the next quarter.

As far as the Indian IT service business goes, when your customer is in a bad time and has to cut cost, if you are one of those who can help in cutting cost, then your business should not suffer,” he said.

Mr Kamath also said he expects the cost disadvantage for Indian companies borrowing in the US market to narrow down as the crisis in the US financial system get evened out. “The US has a challenge in terms of the financial system. The other day I was talking to somebody in the US treasury. Their view was they were more than half way through resolving that issue (crisis in financial system). That is good news.

Costs already had gone up. You could easily assume that costs certainly had gone up by 2.5 percentage points. A little bit of good news from the US should start contracting spreads for Indian corporates, which is good for everybody,” he said.

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