FE Round Table: India Inc sees opportunities in Europe despite uncertainty

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New Delhi | Published: July 12, 2016 6:45:02 AM

While Britain’s exit from the European Community (EC) brings with it more uncertainty to an already fragile economic recovery, corporate India believes there is nevertheless an opportunity for it.

While Britain’s exit from the European Community (EC) brings with it more uncertainty to an already fragile economic recovery, corporate India believes there is nevertheless an opportunity for it. An expert panel unanimously agreed that Indian companies could set up greenfield ventures in Europe and also scout for M&A opportunities. Senior executives concurred that Europe presented opportunities in that it was a fairly big consuming market and could provide skills.

“Hungary is a secure country where everyone and the investments can be safe,” Peter Szijjarto, minister for foreign affairs and trade, Hungary, observed while giving the inaugural address at the recent FE Round Table Conference on ‘India’s Chance To Go Global’.

The conference was hosted by the Hungarian Investment Promotion Agency (HIPA) and The Financial Express. The minister asserted that the objective of the country’s tax policy was to create jobs and to encourage companies to invest.

Tata Consultancy Services, which has had a presence in

Budapest since 2001, is looking to expand its global development centre there, Ameet Nivsarakar, vice-president of corporate affairs at TCS, said.

Nivsarakar believes there is adequate talent in Hungary and across the rest of Europe and that the education system is supportive.

“Budapest being a cosmopolitan society is able to attract talent from other parts of Europe,” he added.

Sunam Sarkar, president and chief business officer, Apollo Tyres, observed that his firm had opted to set up shop in Hungary after evaluating15 countries. “Some of the criteria would specifically apply to the auto industry, but I think a large part of the criteria would apply across the board,” Sarkar said, explaining the regulations were investor -friendly in general as were labour policies. “The government is willing to walk the extra mile and support the investors,” Sarkar said.

Speakers nevertheless advised some degree of caution. Harjeet Kohli, group head, investor relations and treasury, at Bharti Airtel, noted that while investing abroad, companies should keep in mind the capital allocations and also infrastructure challenges. Kohli believes it should be possible to do transactions where both cash and stock are involved. “This would ensure the seller has a skin in the game by being as part of equity, you are wedding them in as well,” he pointed out.

Swapan Johri, executive vice-president for Strategic

Engagements at HCL Technologies believes that while there may be some uncertainty right now and it might be hard to assess the opportunities many would come India’s way. “Surely we think there will be an opportunity arising out of

Brexit and all the changes there,” Johri opined.

NK Verma, managing director of ONGC Videsh, observed companies in the oil and gas sector were opting for joint ventures, given the business was one of high-risk and high-returns. “With the support of the government, we will be doing more ventures overseas because here itself there could be investment opportunities for $5 billion,” Verma said. He cautioned

however that asset prices were not in keeping with the decline in global crude prices.

The advantage for software and services companies is the time-zone in which Hungary is placed, Robert Esik , president, Hungarian Investment Promotion Agency, pointed out. Hungary is placed in-between a six-hour difference from both Tokyo and New York, and that’s attracting services companies, Esik observed. “ The country is also an attractive destination for the manufacturing sector as well, since it gives a direct approach to the Russia and European Union and to other emerging economies of the western world,” he added.

In the past two years, India has been the largest investor in Hungary with more than $2 billion in cumulative investments in greenfield projects. In 2014, Apollo Tyres set up its largest factory overseas in Hungary at an investment of 475 million euros, while in 2015, Samvardhana Motherson Group committed a ‘significant’ investment in the country for its automotive business.

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