INDIA -A FORTUNE 500 SUCCESS STORY

By M H AHSAN & SARAH WILLIAMS.

Fortune 500 companies have a long history in India, probably more than 200 years. The Indo-American Chamber of Commerce was curious to find out what makes them tick in the South Asian country, so they took an in-depth look. A recent study by the chamber found that currently about 220 of the Fortune 500 companies from countries such as the US, United Kingdom, Germany, France, Japan, Netherlands, South Korea, Switzerland, Canada and Sweden are present in India.

Today, these countries account for more than 65.2% of the global economy. Interestingly, the two-way bilateral trade (exports and imports) between India and these countries had increased to US$39.26 billion in 2002-03, from $32.38 billion in 1998-99. That represents a compound annual growth rate (CAGR) of 4.9%. In 2002-03, these countries together accounted for 34.4% of India's total trade.

Fortune 500 companies have invested in India across a spectrum of sectors: food and beverages (Coca-Cola, PepsiCo), consumer durables (Samsung, Philips, LG, Canon, Electrolux), automotives (General Motors, Ford, Toyota, Bosch, Visteon), computers and software services (IBM, Sun, Honeywell), pharmaceuticals (GlaxoSmithKline, Pfizer), consumer products (Unilever), financial services (Citigroup, HSBC), insurance (Allianz, Prudential), engineering (Siemens, ABB, Alstom, Bombardier), logistics (FedEx) and petrochemicals and chemicals (BP, Shell, BASF).

On the other hand, about 250 of the Fortune 500 companies are clients of Indian Information Technology (IT) companies. The Indian IT Industry had sales of $14 billion in 2003. 40%, or more than 200, of the Fortune 500 companies are currently outsourcing their service and support services to India. The trend is likely to continue, as a global survey carried out by Hewitt Associates showed. This survey reported that more than 60% of Fortune 500 companies favored outsourcing to India, and of those companies not currently using an off-shoring model, 71% intend to do so sooner rather than later.

India offers several advantages that can be and have been effectively leveraged by global companies to derive business gains. India is the world's largest democracy and the 12th largest economy (4th largest based on purchasing power parity). India has experienced robust growth and has a positive outlook (strong and stable gross domestic product growth rate, strong economic-reforms process, reduction in external debt as a percentage of GDP and strong foreign direct investment or FDI inflows). Several leading multinational companies have invested in setting up large-scale operations in the country.