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    Indian Business Going Global

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    Shailendra Joshi
    This document discusses the opportunities and pitfalls Indian businesses face when expanding globally. It provides examples of major Indian companies investing abroad in countries like Australia, China, Sudan, and others. The pitfalls discussed relate to lack of knowledge about local laws, culture, business practices, and contractual agreements. It advises Indian businesses to thoroughly research the country and involve local professionals to understand these issues before investing or contracting with foreign partners. Precautions include conducting due diligence, clarifying payment terms and dispute resolution in agreements, and limiting third party liability exposure.

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    Indian Business Going Global

    Uploaded by

    Shailendra Joshi
    89 views17 pages
    This document discusses the opportunities and pitfalls Indian businesses face when expanding globally. It provides examples of major Indian companies investing abroad in countries like Australia, China, Sudan, and others. The pitfalls discussed relate to lack of knowledge about local laws, culture, business practices, and contractual agreements. It advises Indian businesses to thoroughly research the country and involve local professionals to understand these issues before investing or contracting with foreign partners. Precautions include conducting due diligence, clarifying payment terms and dispute resolution in agreements, and limiting third party liability exposure.

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    This document discusses the opportunities and pitfalls Indian businesses face when expanding globally. It provides examples of major Indian companies investing abroad in countries like Australia, China, Sudan, and others. The pitfalls discussed relate to lack of knowledge about local laws, culture, business practices, and contractual agreements. It advises Indian businesses to thoroughly research the country and involve local professionals to understand these issues before investing or contracting with foreign partners. Precautions include conducting due diligence, clarifying payment terms and dispute resolution in agreements, and limiting third party liability exposure.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    89 views17 pages

    Indian Business Going Global

    Uploaded by

    Shailendra Joshi
    This document discusses the opportunities and pitfalls Indian businesses face when expanding globally. It provides examples of major Indian companies investing abroad in countries like Australia, China, Sudan, and others. The pitfalls discussed relate to lack of knowledge about local laws, culture, business practices, and contractual agreements. It advises Indian businesses to thoroughly research the country and involve local professionals to understand these issues before investing or contracting with foreign partners. Precautions include conducting due diligence, clarifying payment terms and dispute resolution in agreements, and limiting third party liability exposure.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 17

    Formulating Strategies

    Providing Solutions
    Achieving Success

    INDIAN BUSINESS GOING GLOBAL


    Pitfalls and Precautions

    Dubey & Partners – Advocates


    www.dubeypartners.com
    Dubey & Partners – Advocates
    www.dubeypartners.com

    More than a decade of liberalization and continuous


    efforts on part of Government has opened new
    avenues for Indian Entrepreneurs. In recent years,
    Indian companies have started taking initiative to
    move into global market.
    Dubey & Partners – Advocates
    www.dubeypartners.com

    Here are some facts relating to it:

    ƒ A.V.Birla Group, operating in 18 countries,


    recently acquired two copper mines in Australia
    for US$ 80 million and a Carbon black
    manufacturing unit in China.
    Dubey & Partners – Advocates
    www.dubeypartners.com

    ƒ ONGC Videsh Ltd. (OVL) is investing over US$


    2 billion in discovered / producing oil fields in
    Sudan, Russia and Angola and gas fields in
    Vietnam. Besides, OVL has acquired exploration
    assets in Myanmar, Libya, Iran, Iraq and Syria.
    Dubey & Partners – Advocates
    www.dubeypartners.com

    ƒ Tata Motors paid $118 million to buy Daewoo.

    ƒ Infosys has bought an Australian Software firm


    for US$ 23 million.

    ƒ Ranbaxy gets 70% of its revenue from its


    operations outside India with 40% from USA.

    ƒ Reliance recently paid $ 207 million to acquire


    Flag Telecom.
    Dubey & Partners – Advocates
    www.dubeypartners.com

    Indian Export: Region-wise


    (In US $ Million)

    Region April-August April-August


    2003-2004 *2004-2005
    Europe 5701.95 7344.06

    CIS & Baltic 374.82 445.32


    States
    Asia and Oceania 9729.34 13570.61

    Africa 1325.66 1739.56

    America 4962.15 5578.83


    *Projected
    Dubey & Partners – Advocates
    www.dubeypartners.com

    PITFALLS
    Pitfalls could be primarily divided as under:

    1. Commercial

    2. Financial

    3. Legal
    Dubey & Partners – Advocates
    www.dubeypartners.com

    For further understanding we have divided global


    working of Indian business under following two
    heads:

    I. In case where investment is made outside India;

    II. In case it is through contract with Foreign Party.


    Dubey & Partners – Advocates
    www.dubeypartners.com

    I. In case where investment is made outside India:

    ƒ Lack of knowledge about the Country;

    ƒ Lack of knowledge about the Company;

    ƒ Lack of knowledge about working culture;


    Dubey & Partners – Advocates
    www.dubeypartners.com

    ƒ Lack of knowledge about laws, relating to


    company operations, labour, tax etc.;

    ƒ Lack of knowledge about investment laws, both in


    the country of investment and in India, notified
    and amended by Government, time to time.
    Dubey & Partners – Advocates
    www.dubeypartners.com

    II. In case it is through contract with Foreign Party:

    ƒ Lack of understanding of performance parameters;

    ƒ Lack of understanding about quality control;


    Dubey & Partners – Advocates
    www.dubeypartners.com

    ƒ Lack of understanding of Intellectual Property Rights;

    ƒ Lack of understanding relating to costing/pricing;

    ƒ Lack of understanding about delivery modes;

    ƒ Lack of understanding relating to warranty /


    guarantee;
    Dubey & Partners – Advocates
    www.dubeypartners.com

    ƒ Lack of understanding relating to governing law;

    ƒ Lack of understanding relating to mode of dispute


    resolution;

    ƒ Lack of understanding relating to jurisdiction of


    Court;

    ƒ Lack of understanding relating to enforcement of


    Court decision;
    Dubey & Partners – Advocates
    www.dubeypartners.com

    ƒ Lack of understanding about ethical aspects;

    ƒ Lack of understanding about third party liabilities;

    ƒ Lack of understanding about force majeure.


    Dubey & Partners – Advocates
    www.dubeypartners.com

    PRECAUTIONS
    ƒ Spend time to understand the Country – History
    & Culture.

    ƒ Involve professionals, with international exposure


    to assist.
    Dubey & Partners – Advocates
    www.dubeypartners.com

    ƒ Take personal interest in acquiring knowledge


    of corporate laws on macro level.

    ƒ Rationalize tax planning with the help of


    professionals from these countries.

    ƒ Work closely with professionals on various


    aspects of agreement.
    Dubey & Partners – Advocates
    www.dubeypartners.com

    ƒ Undertake due diligence before entering into


    business relationship;
    ƒ Put your concerns about mode of payment, time
    and quantum clearly on table, before closing the
    deal;
    ƒ Be careful about third party exposure - take
    commitment from foreign party on this aspect;
    ƒ Be careful about governing law, jurisdiction of
    Court, mode of dispute resolution.

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