UK manufacturers should consider joint ventures with Indian counterparts as a way of gaining a foothold in lucrative Asian markets, according to Clearwater Corporate Finance.
After a recent visit to India, a team of Clearwater specialists advisors found the interest in the UK market was high (the world’s ninth largest manufacturing economy).
This puts British businesses in a strong position as overseas companies are keen to improve their own manufacturing bases via ‘technology transfer’ – the sharing of specialist knowledge across borders.
This means that joint ventures with UK companies are an attractive proposition for Indian firms, which in turn, allows businesses here to capitalise on India’s buoyant economy, which is expected to grow by 5% in 2013.
Constantine Biller, industrials Partner at Clearwater Corporate Finance, said: “India offers staggering opportunities to UK firms looking to grow. It is a country hungry to improve its manufacturing base and it knows the UK, with its world-class engineering assets, can help it do that. The benefit for companies here is access to one of the world’s largest and fastest-growing economies.
“For those looking to enter the Indian market, a joint venture offers huge potential. It can provide a ready-made manufacturing site and invaluable knowledge of the local market, which is a massive benefit. The quid pro quo, though, is that Indian businesses will expect some technology transfer and the end game may in fact be an acquisition.
“During our visit we met a number of Indian businesses keen on a UK joint venture. It is clearly an idea with potential that could step-change the growth of UK manufacturers.”
The near-shore/far-shore strategy that has driven cross-border deal activity among industrials companies has been highlighted in the past by Clearwater.
The concept acknowledges the significance of supply chains being in close proximity to the lead manufacturer, for example the cluster of component suppliers to Indian-owned Jaguar-Land Rover in the West Midlands or the small- and medium-sized aerospace companies in Lancashire that supply BAE Systems. However, ‘far-shoring’ is becoming more common, too, as less developed manufacturing nations, like India and China, transfer technology to make their engineering bases more sophisticated.