India Inc looks overseas as economy makes little headway.

A prominent industrialist is setting up an overseas manufacturing facility. It's still five months to completion, but he has pencilled the date and time of inauguration in his diary. It's nothing to do with astrology, he clarifies. Just that he's confident things will be done seamlessly and on schedule. "Unlike India, you don't have to run around in circles trying to get clearances," he says.

Going overseas is no longer limited to the Tatas or the AV Birla Group, which now get more than half their revenues from foreign operations. What started as a trickle, with only large players going abroad in search of new assets and a foothold in foreign territory, has become a dominant theme.

Even relatively smaller players are venturing out as the economy isn't making much headway and there's little relief in sight. Latest figures show between January and April, Indian companies invested more than $8 billion (around Rs 45,000 crore at the current exchange rate) overseas.

Bargain hunting in the post-crisis period helped. During 2009 and 2010, a Virtus Global Partners study showed several deals were buyouts of distressed assets, whose parent companies were severely impacted by the global crisis. The list included the S Kumars acquisition of Hartmax, the Cadila-Novavax deal and Piramal's RxElite and 3i-NRLB acquisitions.

"Private investment has slowed down, actually, pretty much come to a halt. So, our people are looking to do things a little more strongly than before . After all, they have to deploy cash somewhere," says Ficci secretary general Rajiv Kumar. He points out that 17-18 clearances are needed before one can start a business in India. While the number of approvals has not gone up, what has changed is the government's attitude. Industry players say that the uncertainty, even after approvals have been received, remains a major spoiler.

With coal and mining approvals proving difficult, Indian companies are now looking at overseas assets. As a result, Indonesia and Australia have emerged as hotspots although, like inflows, nearly half the outward FDIs are routed through Singapore (25%) and Mauritius (22%). Even companies like Lanco now have assets in Australia , which do not only cater to Indian needs.

There's another set of Africa-bound companies . They want to tap into resources, cheap labour and concessional access available to exports to the US and Europe. A commerce department veteran adds that free trade a g reements (FTAs) - and India h a s s u ch d e a l s with several countries and trading blocs ranging from Bangladesh and Singapore to Asean - have added to the overseas rush.

The FTAs give Indian companies the option of setting up factories in countries where labour is cheaper and resources are available. "In addition, the rules are predictable and investors get the red carpet," the official adds. "It shows that our companies are now global players and they are making their contribution by setting up plants and manufacturing facilities," says Biswajit Dhar, director general of RIS, a Delhi-based think-tank .

Source : articles.economictimes.indiatimes.com