A Case Of Reverse Imperialism from India – by Forbes

Beware India’s manifest destiny.

 Though still labeled an emerging market, one could argue that the Indian economy has already emerged. According to Forbes’ list of international billionaires, four of the top 10 are Indian. And with an annualized five-year total return of 42.2%, Forbes ranked India second after Brazil in its assessment of the growth of the world’s largest public companies. The U.K., with a growth percentage of 17.1%, and the U.S., with 11.1%, occupy two of the last three spots on that list. The balance of power is starting to shift.

 This discrepancy is understandable given the context; it is more difficult for established companies in the U.S. and U.K. to grow as quickly as those expanding from nothing, as is the case for start-up companies in India. Nevertheless, these figures highlight an important trend. As the Indian economy continues to spread its wings, its companies are turning to new international markets.

 Could this be the beginning of a reverse imperialism?

 During the 18th century, the British first annexed and then colonized India, seeking to exploit the subcontinent’s vast natural resources and to expand trade. Tea became an important commodity and came to symbolize British colonial rule.

 How times have changed.

 In 2000, Tata Tea–a member of India’s Tata Group conglomerate of 27 publicly listed companies–bought Tetley, the U.K.’s largest tea company. Tata Tea now represents the second largest tea manufacturer in the world by volume, surpassed only by London- and Rotterdam-based Unilever.

 What is driving India’s expansion? “Unlike China where companies are state- and government-led, in India, it is people’s own money,” says Tarun Khanna, a professor at Harvard Business School and author of Billions of Entrepreneurs: How China and India Are Reshaping Their Futures and Yours.

 In March, another subsidiary of the Tata Group, Tata Motors (nyse: TTM – news – people ), acquired Jaguar and Land Rover from Ford Motor (nyse: F – news – people ) for $2.3 billion. It’s another example of originally-British brands being scooped up by an old colonial friend. While the two brands will continue to follow their own business plans, Tata Motors hopes they will boost the company’s ability to be a “meaningful player in the global market,” says Debasis Ray, head of corporate communications at Tata Motors.

 The company recently unveiled its Nano model in New Delhi. Touted as “the people’s car,” the small four-seater with a price tag of $2,500 is said to be the least expensive car in the world.

 The monetary muscle behind the quest for new horizons is fuelled by a cheap domestic labor market and Indian companies’ high price-to-earnings ratios, according to Khanna. Smaller Indian companies can more easily collaborate with bigger counterparts in other markets–even those in other former colonies.

 Last week India’s biggest telecom, Bharti Airtel, called off merger talks with South Africa’s largest provider of cellphone service, MTN Group, citing disagreements over the terms of the deal. Reliance Communications, India’s second-largest telecom, subsequently announced it was entering talks with the South African company. A resulting MTN-Reliance merger would result in over 100 million customers, a larger network than AT&T.

 The shared colonial past, actually, is an advantage. The British Empire, Khanna believes, created a legacy whose repercussions are felt in India and in Africa’s eastern and southern regions. “Imperialism is laying the seeds of global chess, with Indian companies naturally capitalizing on their shared history,” he says.

 Perhaps other nations should prepare for a new breed of imperialism. This time, we will be pouring the tea.

 Courtesy:- Forbes

India has more billionaires than ever before. But are they robber barons or national heroes?

In 1998, when Forbes magazine released its annual list of global billionaires, an Indian billionaire made it into the world’s 100 richest people for the first time. But just barely – Indian-born Lakshmi Mittal ranked at 100. When the 2008 Forbes list was recently released, India dominated the world’s richest billionaires, with four out of the Top 8 in the world, more than even the US.

Image: StockXpertAnd it is not just India that has more billionaires. For the first time ever, Moscow now has more billionaires than New York City, and there are now more billionaires in the Top 100 from emerging market economies than from the US. New wealth is being created around the world at record levels, especially in the emerging markets.

Although the Indian billionaires on the Forbes list made headlines around the world, many are critical of this massive accumulation of personal wealth in developing countries such as India, where the average income is only $80 per month.

In fact, some might even condemn Indian billionaires as “robber barons,” in reference to the public criticism of the rising class of millionaires in the US a century ago. Some claim that “robber barons” accumulate enormous personal fortunes at the expense of consumers and workers, partly by monopolizing and manipulating markets to their advantage. Others, though, have argued that the “robber barons” actually benefit society by introducing new products, efficient methods of production and distribution, and in the process of amassing wealth create thousands of jobs and lower prices for millions of consumers.

What is India to think of its rising billionaire class, a group that now exists for the first time? Should the Indian billionaires be condemned for their massive accumulation of wealth in the midst of widespread poverty? Before Indian billionaires are dismissed too quickly as 21st century robber barons, there are several important reasons why India should celebrate them.

First, it should be recognized that in the process of creating personal fortunes, India’s billionaires create vast amounts of wealth for others, including thousands of employees. Consider Azim Premji. At the age of 21, he took over Wipro in 1966, and helped transform it from a vegetable oil and soap company with $2 million in annual sales into a $5 billion global IT giant.

Premji obviously couldn’t have orchestrated the explosive growth of Wipro without the help of others. Wipro currently has a staff of more than 73,000, and most of those jobs are in India, and most of those jobs are relatively highly paid. The Wipro example is not unique. In almost all cases, billionaires amass personal wealth by creating large organizations that generate millions of jobs.

And these large billionaire-led organizations typically create employment opportunities across the board, from the lowest unskilled positions to highly paid executives. It has been estimated that India’s top 10 billionaires have collectively created more than one million jobs in their companies. These entrepreneurs create many millionaires below them and employment for millions

Further, many of the employees who are currently at senior levels of organizations founded or run by billionaires started out their careers at very low or entry-level positions, and worked their way up to upper management levels. There are countless examples of steep upward mobility in Indian companies founded by billionaires. Simply put, in the process of becoming billionaires, these entrepreneurs regularly create many millionaires below them, and provide employment opportunities to thousands of people.

Second, most Indian billionaires have gotten rich by targeting affordable products towards the lower and middle classes. For example, look at the various Reliance companies founded and run by the Ambani family in India. From retailing to consumer electronics and telecommunications to retail brokerage, garments and groceries, the Reliance companies have been successful and profitable by bringing low-cost, affordable products and services to the masses.

Billions of dollars have certainly ended up in the hands of the Ambanis, but their companies have generated billions and billions of dollars of value for millions of Indian consumers, and they and their companies have improved the lives of millions in the lower and middle classes of India.

India might not win any gold medals at this year’s Olympics in Beijing, but when it comes to the world’s billionaires, Indians are now among the top world-class gold medal winners. In that respect, the billionaires of India should be admired as national heroes, just like an Indian Olympic gold medal winner.

India is a much more prosperous country today, and has a much larger middle class with its abundance of billionaires, than it was 10 years ago, when billionaires were scarce. When the Forbes list of world billionaires comes out next year, India should aspire for many more on that list since it will be a sure sign that more wealth is being created for everybody.

 Written by : Mark J. Perry and Madhukar Angur