The Hindu Business Line : New partnerships

CLEARLY, THERE HAS been a careful calibration of the process of cementing a relationship in the latest announcement of what the Italian car major Fiat and Tata Motors jointly plan to do. When the announcement was first made some months ago, there was only talk of exploring a range of possibilities. Now the first concrete outcome of an evolving alliance has each partner promising marketing support to the product offerings of the other in the markets where it has the requisite infrastructure, with a hint of joint development of vehicles and sharing of technical expertise with one another. Whatever the final shape, the development is significant from an altogether different viewpoint.

For long, foreign enterprises have regarded domestic entrepreneurs as nothing more than red-tape cutters, with the ability to steer them through the thicket of political and bureaucratic processes as they set about exploring business opportunities here. That this meant offering a minority or, at times, even a majority stake in the joint venture to the local promoter was seen by the former as an upfront cost in the extraction of whatever profits the Indian market offered. Neither did the local promoters have any pretensions of bringing technical know-how to the joint venture nor did their foreign counterparts entertain any hope of that as a possibility, even in some distant future.

It was precisely this state of affairs that led to a phenomenon, post-liberalisation, of foreign businesses unshackling themselves from the yoke of a local partner as the regulatory environment did not require them to be hitched to one. In the circumstances, the Fiat-Tata announcement is a clear endorsement that local enterprises can bring something more to the table than mere knowledge of local terrain. In a sense, it also signals the maturing of the Indian manufacturing sector, many segments of which can be counted among the global players in their respective industries.

This is just as well. Enterprises the world over are caught up in a swirl of economic integration that is global in scope and growing stronger. Businesses no longer have the cushion of national borders to shelter them from the buffeting winds of competition. Even the automobile industry, for long regarded as an icon of national identity along, perhaps, with civil aviation, finds itself in a situation where customers are no longer willing to confer on it that exalted status and hence willing to pay any price it names. They are pursuing `value' across industry segments with a vigour that politicians find impossible to dampen through trade and non-trade barriers in their quest to sustain domestic industry. Pursuit of excellence on a global scale has become an overarching goal. Those that are not confident of achieving this on their own need to ally with others similarly placed. Quite simply, the rules of the global market place would not have it otherwise.