From San Jose Mercury News
San Jose, Calif. — The world got a little flatter Wednesday as India’s Tata Motors said it was buying two storied automotive brands, Jaguar and Land Rover, from Ford Motor.
The $2.3 billion deal reflects India’s growing presence as an international economic player.
Led by Tata Group, India has begun to emerge as a global powerhouse.
"I think that you will find that this isn’t the last move like this," said Sebastian Teunissen, director of the Clausen Center for International Business at the University of California-Berkeley. "I’m sure you are going to see other Indian companies looking for good opportunities in the rest of the world."
If that comes as a surprise to Americans, it’s "only because they have not paid attention to India," Silicon Valley entrepreneur and investor Kanwal Rekhi said in an e-mail message.
Flush with revenue of $28.8 billion in 2007, the Tata Group has made several major international acquisitions in the past few years. There will be more such deals by other Indian companies, experts said.
The rapid growth of India "is good news for the U.S.," said John Shoven, director of the Stanford Institute for Economic Policy Research.
"It’s a powerhouse economy," Shoven said. "This is a huge step up for Tata Motors to grab these prestigious names of Jaguar and Land Rover. It’s just the beginning of yet another powerful member of the global economy."
Shoven added, "This is not something we should necessarily fret about. It is better that we trade and interact with these smart people than isolate ourselves."
Seshan Rammohan, executive director of TiE Silicon Valley, founded by Indian engineers and entrepreneurs, predicted more global acquisitions by Tata and other emerging Indian companies.
Well-established in the Indian, Southeast Asian and African markets, Tata Motors now "wants to come to Europe and America, and that is what they are doing," he said.
Rammohan said Tata Motors is following a path laid down by Japan and South Korea, which began by making cars for their domestic markets that Americans ignored, but followed up with vehicles that became standards for the rest of the world.
India "has created those kinds of vehicles and sold millions and millions of them in their own domestic market," he said. "Over time, they will start selling in other markets. They have developed the technology and ability to become world-class car manufacturers."
Said Sudha Jamthe, an online marketing consultant who also operates the start-up Social Mints: "It all comes down to [the fact that] the world has become really flat."
In Silicon Valley, Tata Consultancy Services, a subsidiary of Tata Group, was one of several companies that imported Indian programmers in the 1990s. It gradually developed a lucrative business offshoring software chores on a global scale. It has offices in Santa Clara and San Francisco.
Tata Motors’ automaking activities had been limited to India until its purchase in 2004 of South Korea’s Daewoo Commercial Vehicles. In India, it is a major manufacturer of light trucks, buses and cars — including the small Nano, which debuts this year.
If it can turn around Jaguar and Land Rover, and restore their former reputations for quality, Tata will find a ready market for the vehicles in India, said Rafiq Dossani, research scholar at Stanford’s Asia-Pacific Research Center.
"In the Indian market itself there is a growing demand for sophisticated automobiles. This is a way to get it," he said.
Though Ford is selling the two auto brands, they are both manufactured in the United Kingdom. That is where Tata Group has made several significant acquisitions in the past five years. Tata Steel acquired the Anglo-Dutch steel maker Corus for $12 billion a year ago. Tata Tea acquired the United Kingdom’s Tetley Tea in 2000.
Copyright (c) 2008, San Jose Mercury News, Calif.
