Perspective from RM on the acquisition spree in India
..and getting just as fat!
This just in from the New York Times;
How India Became Americahttp://www.nytimes.com/2012/03/11/opini ... ica.html?_
Rajiv comment: The content of the article is just the opposite of the title
given to this thread. The content celebrates what it calls "the Americanization
of India". This is India getting digested into Americanism, the expansion of the
American Frontier. The writer is delighted that "old" things like "caste" are
giving way to India's "advancement" in Americanization, and his reference points
for Americanization is its popular brands and pop culture lifestyle.
If India had digested America, then America (like the proverbial deer) would
cease to be itself - it would be the Indian dhabbhas replacing Pizza Hut,
MacDonalds, etc all across USA. This is not the case. America is stronger with
this brand expansion into India. To say that India has digested America would be
like saying that British colonialism was also India digesting Britain. (Many
Brits at that time did write claiming this to be the case, and many stupid
Indians loved to hear it.)
So what is the difference between X digesting Y, and X becoming taken over by Y?
If the tiger upon eating the deer turns into the deer, and the deer remains
alive and well, then it would be a case of tiger being taken over by the deer.
Following is a different kind of example in India-US transactions: India did
appropriate American fast foot know how in the 1990s when a tiny number of
American fast foods entered; at that time Haldiram and several other Indian
establishments responded rather than being overwhelmed. They internalized the
fast food cleanliness, quick service, franchise methodology BUT RETAINED INDIAN
OWNERSHIP, TASTES, ETC. In other words what was considered good and worth
borrowing was Indianized, reformulated in Indian terms and conditions, all under
However, that was just one stage. Later on, people like Pepsi made acquisitions
of Indian fast food chains like Haldirams, so these Indian "responses" have
become part of American MNCs. Hence, in the long run, this has turned into the
expansion of American MNCs into India, not the other way around.
10 years ago, less than 10% of the Indian Sensex companies' market cap was owned
by FII's (Foreign Institutional Investors), and now it is 25% and increasing.
This means that the share of foreign ownership in Indian corporates is
increasing. Typically, the Indian "promoters" of the shares are few billionaires
families who own about 50% of these companies, and the remaining 50% is divided
between the Indian public and foreign investors. Of the latter 50%, the foreign
investors' share has dramatically increased. The trend is therefore: Indian
corporates are getting owned by a few Indian billionaire families plus foreign
The only difference between this and the colonial era is that now there are also
super wealthy Indians sharing the pie and in fact facilitating this massive
transfer of wealth into foreign hands. I cannot celebrate this Americanization
of India and concentration of power as the article does.
Which civilization's framework dominates in these examples? Clearly it is the
western framework. A thousand very small, one-family enterprises owning retail
stores get put out of business by a massive supermarket with US capital. So the
decentralized ownership in the traditional Indian style of free enterprise gets
replaced by a centralized corporate ownership ultimately in foreign hands. In
this process the Indian middlemen get richer as facilitators of wealth transfer.
Much of India's wealth is now foreign owned. The Indian GDP growth rate includes
the portion that is foreign owned. BD is not a book on economics but separately
I think and argue these points with economists. What is now going on in India is
simply UNSUSTAINABLE - please watch my video at the ISEC talk I gave in