ACG Investment and Sourcing in India event

Wednesday 14 May, 2008

I attended this breakfast roundtable discussion hosted by the Chicago chapter of the Association for Corporate Growth, which included a few contributors with a wealth of experience in India who expounded upon the past & future of the country.  It seemed like the group was evenly divided between those who’ve worked in India & those interested in learning about how things work there.

Pradeep Nedungadi, Principal of Visthar, suggested choosing a headquarters location based on skills located in that region.  He compared India with it’s neighbor in saying China has advanced because of it’s government, while India has depite it’s government, although it’s expected the Indian government will play a decreasing role in the econonmy in the next 10 years.  IT has grown so tremoundously because the government couldn’t control it.  There are still lots of hoops to jump through to found a business there, so he recommended finding a local partner to deal with problems, but he sifted through 1000 companies to find the handful that could get the job done.  There are some states in India where he won’t recommend manufacturing because the population is too intelligent for that there.

James Pavlik of Baird Venture Partners gave a short presentation which included these interesting tidbits:

-cited the offshore nation which showed India has advantages in labor costs, size of labor pool, language, & government support over China, the Phillippines, Eastern Europe, Latin America, & Russia.

-a 2005 McKinsey survey indicated India was the leading offshore destination in IT, 
call centers/help desks, human resources, finance & admin, business 
research/analytics, & just barely in R&D

Venture Intelligence India informed that private equity investment in India has skyrocketed from $2.2B in 2005 to $7.5B in 2006, & $14.2B in 2007

Krrishan Singhania of Singhania & Co. provided some of the legal background 
on why/how India has opened up so much in the last 10-15 years. Government use of IT is driving some growth in IT.  There are still caps on investments in insurance & defense industries in India.  The new airport in Bangalore is completed but not open only because the infrastructure leading to it is not yet finished.  Profits can be repatriated, but taxes must be paid on them.  The legal market is still 100% closed to foreigners, so locals like Krrishan are invaluable.

Attorney David Laverty distributed an couple of insightful articles ( indiaacquisitions1 indiaacqusitions2 ) on acquiring Indian companies.

My take is events like these where you can get 1st hand stories from people 
who’ve been there are of great help, especially in someplace as complex as 
India.  I  wish we could have had a bit more input from those desiring to learn more about India in what they’re seeking & the obstacles they’re confronting in attempting to do business there.


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