A brand new flyover stands in the middle of Lusaka, the capital of Zambia, with the orange, white and green flag of India flying on the bridge. All over the city are trucks produced by Tata Motors, a subsidiary of the steel technology empire Tata Group. They can come in handy whether they are building tall buildings or collecting garbage. The signs to guide the driver in the car are in English and Hindi, and the people in the car make calls to each other through the mobile network operated by India’s Bhadi Telecom.
Like citizens of other developing countries, many Zambians are not surprised by the existence of Indian companies. Tata Motors has large assembly plants in many countries, such as South Africa and Malaysia. Batty is one of the largest telecommunications operators in Africa. Carbon black is a raw material for automobile tires, and Aditya Birla Group is the world’s largest carbon black producer and one of India’s largest industrial investors and exporters.
Even in areas of strategic importance in the eyes of the government, such as infrastructure construction and communications, India’s foreign direct investment (FDI) will not be considered as harboring geopolitical conspiracies or hegemonic ambitions. “This is one of India’s selling points.” said Gareth Price of the Chatham Institute, a British think tank.
In the past, people often compared India, an emerging market power with large amounts of capital, to China. But today is different. The surge in China’s outbound investment over the past decade has made this comparison no longer stand up to scrutiny. In contrast, Indian FDI accounts for about 7% of China’s total direct investment in developing countries, which is somewhat lackluster, but for foreign investors who do not want to take political risks, its approach is worth learning.
| Investment overview |
For a long time, companies from different emerging markets have been investing in other emerging markets. Problems such as domestic administrative delays, market chaos and financing constraints have allowed Indian companies to accumulate a lot of experience, which has greatly helped them to penetrate the international market. In 1955, India also helped organize the Bandung Conference to discuss “South-South Cooperation”.
India’s investment in developed countries is more likely to attract attention. Tata Group’s acquisition of Tata Tea Company and Jaguar Land Rover not only involved a household brand and hundreds of millions of dollars in funds, but also had a somewhat anti-imperialist meaning. India’s stock of foreign investment in poor countries is roughly equal to that in rich countries, and has been steadily increasing over time. According to data from the United Nations Conference on Trade and Development, India’s FDI in 2019 reached approximately 46 billion U.S. dollars, higher than the approximately 40 billion U.S. dollars in 2010. Among them, 30 billion U.S. dollars is in Asia and 13 billion U.S. dollars is in Africa.
Multinational companies headquartered in India usually set up subsidiaries in the place of investment and operate funds through tax havens such as Mauritius. Among the 18 million overseas Indians who were born in India or have Indian nationality, there are many entrepreneurs who have changed their passports and registered companies there. “It’s like a puzzle.” Jai Bhatia of Cambridge University described it.
| Every puzzle |
Most of India’s FDI originates from private companies, which operate overseas for commercial purposes. Among them, Indian companies in Kenya are dubbed “Rockets” by the locals because they just want to make money quickly and go home. In addition, there are multinational investors headquartered in India, and Indian immigrant families who have been doing business abroad for generations, especially in Africa.
Centuries ago, Indian merchants began to settle on the edge of the Indian Ocean. In the 19th century, thousands of people were sent to remote corners of the British Empire to work on plantations in Mauritius and build railways in Kenya. Many people stayed and started doing business on their own. Others in India bravely boarded dhows and traveled long distances to Africa to join them. “We are accustomed to looking at issues from the perspective of history and geopolitics, so India can’t do anything without the topic of China.” International issues expert Parago Conner said. His father worked for the Tata Group in Africa. In their eyes, the railway built by Indian laborers in Kenya in the 1890s was replaced by the “Malaka Express”, a sign of China’s rise in Africa. This new railway built by China is named after the “Malaka Festival”, the anniversary of Kenya’s independence from British colonial rule.
Indians living in the diaspora have also faced resentment. For example, in the 1970s, President Idi Amin expelled Asians from Uganda and confiscated their property. But overall, shared experiences cultivated feelings. The Kenyan government even recognized that Asians are its 44th official tribe. Wim Shah’s grandfather immigrated from India. About 35 years ago, Shah and his father and brother co-founded Bidco Africa, which produces fruit juice and cattle feed. He knows where the most authentic Indian food in Nairobi is, and is still a volunteer in the Jain community, but he considers himself to be a Kenyan through and through, holding a Kenyan passport in his hand.
After India’s independence, domestic industrialists began to look beyond the borders. The textile factory established by Bella Group in Ethiopia in 1959 was one of the first batch of overseas Indian-funded enterprises. Subsequently, the economies of Southeast Asia gradually opened up, and the Bella Group expanded in the region. The second larger wave of foreign investment occurred in the 1990s, when the Indian government loosened capital controls. According to data from Australian National University professor Prema-Chandra Atukolala, in 2020, Indian companies have 4,590 overseas projects, far exceeding the 395 of 20 years ago.
Indian companies tend to hire local labor and purchase local equipment in places where they invest. In 2006, the World Bank surveyed nearly 450 companies in Africa. The World Bank found that less than 10% of the total number of workers imported by Indian companies from India, and only 22% of equipment purchased from India. Harry Brodman, the economist who led the study, said that this trend has continued to the present.
This situation may be related to the fact that many Indian companies are still family businesses. The expatriate executives have to worry about the reputation of the founder, but also worry that their actions will damage the image of India. Rudrap Maitra is responsible for Tata Motors’ international commercial vehicle business. He talked about the company’s contribution to the development of overseas markets, including finding ways to send ambulances and garbage trucks to Sri Lanka and Nigeria respectively. “There is no doubt that we have a responsibility to advertise for India.” Maitra said.
Should the tricolor flag be inserted where the business goes, or is there business to do where the tricolor flag is located?
Some people believe that Indian FDI has not fully played the role of its overseas immigrants. The first prime minister, Jawaharlal Nehru, refused to use overseas companies to serve foreign policy. Successive governments have followed in his footsteps and provided limited support for the overseas development of Indian companies at best. Diplomats complained that apart from paying their respects to the government of the country where they are stationed, and laying the red carpet for visiting Indian entrepreneurs, they are helpless. Manu Kandalia was born in Kenya 90 years ago. His parents are Gujarati. Today, Kandaria is the most well-known industrialist in Africa. He regrets that the Indian government has not regarded overseas Indians as “tools” or “resources.”
| Business and Tricolor |
India’s former diplomatic ambassador Gekit Singh hinted that if the Indian government increases its support and cuts the cost of overseas investment by local companies, these companies will play a greater role. According to data from the Export-Import Bank of the United States, in 2019, India officially provided US$7 billion in medium and long-term export credits.
Independence from the government brings another advantage to Indian companies. Since the acquisition of the mobile communications business of Kuwaiti telecommunications company Zain in Africa in 2010, Batty’s strategic strength has been highlighted. But the company’s executive, Ahir Gupta, said that Batty “undoubtedly” would do anything the African government requires, even disconnecting the communications network. Gupta also added that Bhadi’s overseas operations will never follow the orders of the Indian government.
Not all businessmen with Indian descent can be called the spokesperson of the motherland. Mohandas Gandhi worked as a maritime lawyer in South Africa and left a good impression. The Gupta brothers, who moved from Uttar Pradesh, India to South Africa in the 1990s, were at the core of the corruption scandal that led to Jacob Zuma’s step down in 2018. Elsewhere, Vedanta Resources and the Zambian government have had fierce disputes over copper mining.
India’s political center New Delhi and the commercial center Mumbai maintained independence, and it worked well in the peace and prosperity. However, when the overseas business of Indian-funded enterprises is in a mess, the life in the motherland of India is not easy; vice versa, when India’s foreign relations become complicated, investors will find that overseas business has not improved. “Does the tricolor flag wherever business goes, or is there business to do where the tricolor flag is located?” said Tanway Madden of the Brookings Institution in Washington. “In the end, you will find that they are Intertwined.”