India, expanding its global reach

India's Tata Motors said on Wednesday it had bought British luxury icons Jaguar and Land Rover from struggling United States carmaker Ford for $2.3-billion as it expands its global reach.

The all-cash deal is part of Tata's efforts to grow outside Asia, but analysts have questioned how the Indian firm -- maker of the Nano, the world's cheapest car -- will absorb the two high-end marques into its operations. "We are very pleased at the prospect of Jaguar and Land Rover being a significant part of our automotive business," Tata group chairperson Ratan Tata said, pledging to keep the identities of the famous brands "intact".

Tata Motors, part of the sprawling tea-to-outsourcing Tata Group empire, said the "total amount to be paid in cash" would be $2.3-billion and added Ford would contribute up to about $600-million to the Jaguar and Land Rover pension plans.

The purchase, which has been the subject of speculation for months, comes amid an economic downturn that has put the squeeze on demand for prestige vehicles. In January, Tata unveiled the Nano at a price of $2 500, hoping that the no-frills auto could revolutionise travel for millions in India and elsewhere.

But with the acquisition, Tata would be in the unusual position of making the cheapest car in the world as well as some of the most expensive.

Of late, tough global economic conditions have put sales of expensive cars into reverse. US and European sales of Jaguar fell by over 30%, year-on-year, during the first two months of 2008.
"Both brands are already experiencing declining sales," said Aniket Mhatre, auto analyst at Mumbai brokerage Prabhudas Lilladher.

Interestingly, just this year Forbes included 3 Indians in top 10 richest individuals. Is india becoming a global economic power? The question for Pakistan is either to work with Indian companies to benefit from their experience or go all out confrontational and competitive alternative for foreign investors.

If industry is to grow here in Pakistan then government need to participate and indulge itself into supporting > expanding local industry to the position that they compete with international brands as a financial muscle.