With globalization of economies, entry barriers are getting reduced and markets are consolidating into fewer and larger entities. Last year was a record year for mergers and acquisitions worldwide with India making headlines and especially the Tata - Corus deal securing an international spotlight. With anticipated continuation of reforms and liberalization process initiated by the Indian Government, the investment activity is expected to grow at rates higher than those observed in 2006. Presently, India ranks fourth, just after China, in merger and acquisition activity in the Asia-Pacific region, with continuing uptrend in 2007. The year 2007 truly seems to be the phase of Indian globalization as is evident from acquisitions like Novelis Hindalco and Infocrossing Wipro.

The Indian entrepreneurs making cross border acquisitions has its own set of problems. Foreign takeovers raise a host of multifaceted issues that are worthy of debate and as were also evident in the Tata Corus deal. Most of the recent cross border deals have highlighted issues of security, investment restricted regimes, national identity and sovereignty, at the core of globalization. There could be genuine concerns ranging from corporate governance issues emanating from the different corporate cultural values of the investing and investee entities, protectionist backlash against globalization and also the risks associated with foreign control of strategic sectors.

The viability of investments overseas and cross border takeovers is presently a debate between the proponents of the economic liberalization and those who seek to protect symbolic or strategic national industries. In the era of rapid globalization, consolidation among multinational corporations and foreign takeovers is witnessing an increased activity. What is required however is that all nations must consider their options carefully regarding investment policies, tax structures and foreign takeovers, on both unilateral and multi lateral levels, in the coming years if they desire to continue to achieve growth through economic integration.

Nevertheless, successfully adjusting to the new reality of rapid globalization will be one of the greatest challenges of the twenty first century and how well a nation will adapt to the same is anyone's guess.

By Munish Sharma 
Link Legal, Advocates
109, Golf Apartments
Sujan Singh Park
Maharishi Rammana Marg
New Delhi - 110003 India 
Ph: 91 - 11 - 2461 0080 - 82
     91 - 11 - 2465 4840 - 42
Fax:91 - 11 - 2461 0083
 E.mail: munish@linklegalin.com