International investors in India

By Will North

Last month, I wrote about how many major manufacturers are looking to sales in emerging markets to support flagging growth in more established markets. This month, we can see how companies are signing deals in India to develop crane manufacturing.

Most prominent in the pages of this issue is a profile of the partnership formed between Karthigeya Group in Chennai and British independent manufacturer Street Crane. Under the deal, a Karthigeya subsidiary, K2 Cranes, will manufacture systems using crane kits imported from Street Crane in the UK. The company has already seen rapid growth, starting from scratch three years ago and now building 200 cranes a year. It has now built a 45,000 sq ft factory to support this growth.

In the news pages, we feature two more stories on partnerships in India. Japanese manufacturer Mitsubishi Heavy Industries has recently signed a deal with Indian firm Anupam, forming a joint venture (Anupam- MHI Industries) that will manufacture heavy-duty material handling equipment, including quayside container cranes, as well as handling marketing and after-sales service. A third deal involves Chinese construction equipment manufacturer Zoomlion and Indian materials handling crane manufacturer ElectroMech. ElectroMech, based in the thriving industrial centre of Pune, is a company that clearly knows how to make an international
partnership work; they have for a long time worked with overhead crane manufacturers Abus to distribute the German company's cranes around India. Under the new deal, ElectroMech will manufacture and distribute Zoomlion cranes in India.

Increasingly, it looks like India will be one of the next markets to follow China and, further back, Japan in transforming itself into a leading location for global manufacturers. China's growth began to take off in the early 1990s, and has soared since the start of the millennium. One sign of confidence in that growth among global businesses is foreign direct investment. In China, FDI net inflows rose from virtually nothing in 1990, through around $30bn in 2000, to $185bn today.

India started the century with similarly negligible levels of foreign investment. In 2008, it attracted net inflows of $43bn. This has slowed slightly since, as investment capital around the world has dried up, but still stood at a healthy $25bn in 2010. As companies like these develop their partnerships, and India's politicians are pressured to finally tackle some of the issues that stand in the way of a healthy business environment, the company has a real chance to make itself a global leader in manufacturing.