The Strategies continues...

General Electric did $1 billion in business here three years ago and continues to maintain the same pace. It has so far invested $600 million in India; this money has brought domestic earnings of $1 billion and exports worth another $1 billion. In other words, GE has recouped more than three times its investments.

Indeed, the American multinationals are scaling up as if there's no tomorrow. India is already Reebok's fastest growing market in the Asia Pacific. Reebok India plans to open a new store in India every week until the end of 2005. India is also Motorola's third-largest market. Ford arrived in India at the turn of the millennium with 12 dealerships in eight cities; today it has 90 dealers in 70 cities. The US auto major has recently completed what it calls "its best-ever year" in terms of sales. While many US companies are benefiting from the growing size of the domestic market, others are being rewarded for making India their hub. The US automotive systems company, Visteon, makes automobile starters and alternators for the European market. With $43 million in sales, Visteon is the largest exporter of alternators out of India.

The rapid growth is not restricted to IT or manufacturing. American companies also are making important inroads in India's massive farm sector, which employs 70% of the population either directly or indirectly. The US agrochemical giant, Monsanto, started selling Bt cotton seeds in India barely two years ago. In the first year (2003) about 75,000 farmers supported Bt cotton. The number was 300,000 in 2004 and in 2005 about 500,000 farmers are expected to cultivate the crop.
For US investors who bought into the India story in the 1990s - when others were still restricting their Asian forays to China - the mood is upbeat. A study conducted a few years ago by the Xerox Corporation and consulting firm Inter-Link India revealed that about 70% of all American companies reported better than expected market share, market growth, product launches and profits. Only 14% were worried about sovereign guarantees. Almost all those surveyed said they would not scrap their venture in India.

More than 93% rated the business climate in the states they were located in as fair to excellent. In segments such as information technology and software, an overwhelming 83% of American companies said they were very happy with their experience in India. This hardly comes as a surprise. Nine out of the top 20 Indian IT firms are from United States. These firms make up more than 37% of the turnover of the top 20 firms operating in India. And they're making hay. Oracle started its Indian operations in August 1993. Its Indian subsidiary has achieved a CAGR of about 40% since its inception and sells more call-center software in India than the rest of Asia Pacific combined. Between September and November 2004, Oracle India's earnings per share increased 35%, net income grew 32% and operating margin at 41%, the highest ever. At another level, IBM led India's server market in 2004 with a 30% market share.

PepsiCo India - which is expecting a 15-20% increase in sales in 2005, according to its India head, Rajeev Bakshi - has 19 company-owned factories and 21 franchisees. The company has set up eight greenfield sites and is planning an investment of about $150 million in the next two to three years. Similarly, from 1993 to 2003, Coca-Cola invested more than $1 billion in India, making it one of the country's top international investors. By 2003, the Atlanta giant's Indian arm had won the prestigious Woodruff Cup from among 22 divisions of the company based on three broad parameters of volume, profitability and quality. Meanwhile, in less than a decade the US fast food chains, McDonald's, Pizza Hut and KFC, have established a strong presence in urban India by putting together recipes made for palates of Indians. KFC came to India in 1995; they opened 70 restaurants over the next eight years. Last year, they opened 30 more, for a total of 100. Their target in 2014: 1,000 restaurants.