Gobbling Up The Globe

Your heart must have puffed up a little last week, as mine did, on learningthat the Tatas were acquiring Europe's second largest steel company, Corus,paying £4.3 billion. This is the biggest foreign purchase by an Indian companyand will place Tatas amongst the Big Five of the world's steel-makers.

But it is not just the size of the transaction that makes it significant. Inactuality it is a historical landmark. It proclaims the end of Europe's economicdomination of the world which was made possible by its maritime superiority. Itis the culmination of the process which began with Japan's victory over Russiain 1904, the political liberation of India in 1947, and the rise of communistChina soon thereafter. It graphically demonstrates that Asia is in businessagain and is not a back number.

The acquisition of Corus is not the Tatas' first venture abroad, nor are theTatas alone in seeking foreign pasturage. To name a few others, ONGC Videsh hastaken over Ominex of Colombia for $425 million, Dr Reddy's has acquiredBetapharm of Germany for $571 million, Videocon has bought Daewoo Electronics ofSouth Korea for $684 million, Ranbaxy has bought Terapia of Romania for $324million and Suzlon Energy has bought Hansen Transmission, Belgium, for $565million.

The Tatas themselves have bought 21 companies over the last six years. Theacquisition five years ago of Britain's Tetley Tea was widely noticed. Tata Teahas also made its presence felt in America by acquiring the food and beveragefirm Energy Brands. But these 20-odd deals in all involved $2.8 billion. It isthe magnitude of the Corus transaction that made it front-page news all over theworld. It has been interpreted as proof that Indian entrepreneurs have"well-honed competitiveness, quality consciousness and human resourcestructures."

There is one more difference. A couple of months ago there was an even largersteel merger in which an Indian name figured when Mittal Steel took over theEuropean steel giant Arcelor. But Mittal Steel is not an Indian company. Nor forthat matter does Lakshmi Mittal's name figure in the long list of the heroes ofIndia's economic regeneration, whereas Jamsetji Nusserwanji Tata is a name thatwears a halo. What is remarkable is that the company has maintained itsreputation over several generations, for Tata means not only Jamsetji but DorabTata, J.R.D. Tata, Ratan Tata and others as well.

The Corus deal brings back many memories of the battles that Jamsetji Tatahad to wage. He was no political rebel. But he was an Indian who believed inIndia and asserted the right of Indians to carry on every legitimate economicactivity. The colonial masters had an ambiguous attitude towards him. Theyheaped honours on him for his loyalty to them and for his philanthropy. But theywere grudging in extending support to his proposals and initiatives.

Jamsetji Tata's dreams covered a wide field. Steel occupied a central placein his scheme for he knew that the whole edifice of a resurgent, modern economyrested on steel. He was convinced that India had the raw materials and themanagers and manpower to manufacture quality steel at a lower rate than importsfrom Europe would cost. But the British business community and the civil servicewere lukewarm. Were they not guardians of the mystique of western superiority?They knew that the Empire would last only as long as the key to moderntechnology was kept in the masters' hands.

Typical of the attitude of the government was the comment made by SirFrederick Upcott who presided over the fortunes of the Great Indian PeninsularRailway (GIP) which had its headquarters in Bombay. With withering sarcasmUpcott proclaimed his readiness to eat every pound of steel rails that Mr Tatacould produce. Alas, Jamsetji Tata was not alive when his steel mill, which wasset up with the help of American technical consultants, went into production in1912. Where the uppity Upcott was at that time and what he did are not recorded.

But even during the First World War it was recognised that Tata Steel scoredboth in quality and in terms of cost of production. The EncyclopediaBritannica records that by the time of the Second War, the Tata Steel millhad become the largest in the British Commonwealth. The Encyclopedia addscryptically that the company received no help from government. The drive camefrom within, from the extraordinary pains taken by the Tata organisation tomaintain high standards of technological and managerial integrity.

This question of integrity assumes added importance in these days ofglobalisation. The high wage levels and the non-availability of trained manpowerat home are inducing the high-wage industrial countries to get some parts of thework done in countries where wages are low. This is similar to the earlierpractice of purchasing components from small manufacturers.

But the practice now is to farm out even basic operations, particularly thoseinvolving information technology, in which it is possible to maintainsimultaneous coordination across countries and continents. Globalisation demandsefficiency and promptness. Cost advantage is its basic raison d'être.Contractual obligations are likely to be of a shorter duration.

Ideology and sentimentality are both likely to receive less emphasis. Whatthis means is that the habit of coming to special arrangements with somecountries on the basis of allegiance to some political philosophy such associalism or the neighbourhood principle will see a waning.

At the same time there will be an increase of geographical mobility among theyoung and the talented. National boundaries and allegiances will count for less.A new technomanagerial class is coming into being in which the ability to adoptand adapt swiftly to new procedures and possibilities is likely to be thesupreme virtue. One can only hope that this new morality which rewards thebright fellow will have some place also for the slow-coach.

After decades of waiting, India is now accepted as a competitor in theIndustrial Olympics. Indian managers and technological leaders will be seen inforeign lands more and more. The eyes of the world will be on them. Will they becontent to be Brown Sahibs?

Or will they be tempted to play modern-day Haroun al-Rashids and try toimpress the world by their lavish "oriental" life styles? Or will theybe partners in an endeavour to ensure that globalisation will not mean a furtheraccentuation of economic inequalities among nations and classes but the startingpoint of the search for a new humanity?

H.Y. Sharada Prasad was adviser to Prime Ministers Indira Gandhi and RajivGandhi