The words still ring in my ears?.?We must



fasten our seat belts?. Our economy is set to

open to the world?..? These were the words

said by the then Prime Minister P V Narasimha

Rao while he was addressing the nation in 1991, opening India's closed economy, till then, to the world.In the next two years we saw thousands of multinational brands in India. Indians got access to foreign banks, cars, clothes and even fast good joints. While this was happening inside India the common man did not notice the surge of foreign takeovers by Indian companies. India being an attractive FDI destination also became a major Foreign Direct Investor. This trend became more rapid after 2003. The Government in 2004 removed the cap of US $ 100million on foreign investment by Indian companies and raised it to the net worth of the company.India is such a diverse country. On the one hand it houses the world's largest population under the poverty line and on the other the Forbe's list of the richest in the world has at least 10 % Indians featuring?.. The Ambani brothers, L N Mittal, Aziz Premji, to mention a few, hence as far as FDI is concerned India cannot be described as an underdeveloped country since it can mobilize substantial native capital..The reasons for such takeovers are many. There was a large technological gap between foreign and Indian firms at the time of opening up of the Indian economy in the 1990s. The services sector (primarily the IT sector) did well initially and fuelled economic growth. Now Indian firms that are sitting on heavy cash reserves are seeking to bridge the technological gap by simply taking over foreign firms rather than develop advanced

technologies themselves. In the short term this seems to be a sensible strategy. Acquiring foreign firms will help the Indian companies build up their brand value and image,help overcome the technological gap and give access to new markets. Also globalization provides the much needed immunity to a company against market swings, currency fluctuations etc. in any country. Sometimes a certain business that is not doing too well in India takes over a smaller business which is doing well elsewhere thereby making it a win-win situation for both companies. Acquiring a foreign company also gives ready access to the existing market of the acquired company.Markets in the developed countries(economies) like EU and north America are mature and saturated thereby making it difficult for Indian companies to gain market share without acquisition. An acquisition is less expensive than creating a global brand from scratch. This approach is common for Indian companies that, for the first time, are seeking to translate fast growth at home into an international presence.The value of takeovers by Indian firms has risen from less than $1 billion in 2000 to an estimated $8 billion in 2006. Acquisitions in the first six weeks of 2007 added up to more than $18 billion. Some of the major takeovers include Hindalco indus-tries taking over the Canadian aluminium company Novelis for $6 billion, the takeover of the Netherlands based steel maker, Corus, by India's Tata conglomerate for $12 billion. The Tata's takeover of jaguar and Land Rover has been seen as a turning point in the car industry's history. In this case the acquired company could also benefit from Tata's business portfolio which is spread across many sectors including IT, services, tea production and steel.

The services sectors acquisitions from India

have been largely led by Indian firms from the

Information technology. They account for as high

as 84 % of overseas acquisitions in number and

85 % in value during 2000-2007. The biggest

ever overseas acquisition from the IT sector is

the acquisition of US based Infocrossing byWipro technologies in August 2007.The largest overseas acquisition from Indian pharmaceutical industry has been made by Dr.Reddy's Laboratories in Feb 2006. it had acquired the fourth largest generic company in Germany, Betapharm Arzneimittel GmbH for about $597 million.These developments can be summarized by the following statement made by the man of India's Information technology industry,N.R.Narayana Murthy, ?The mindset of Indian firms is becoming increasingly globalized. It means the entire globe is our playground.?