09|06|2010

India, Emerging Investment in Spain

The economic boom in India, one of the world’s most important emerging countries over recent years, has been accompanied by a major internationalization process in its multinational companies, which have successfully gone about buying strategic companies in global markets.

As a result of this process of taking over international companies, the presence of Indian-owned companies in Spain has increased, through the subsidiaries of foreign companies established in Spain and purchased by Indian companies. Examples of this phenomenon include the takeover of the Land Rover, Jaguar and Rover brands from the Ford group along with their Spanish subsidiaries, by Indian firm Tata, and the merger of Arcelor with Mittal Steel, resulting in Arcelor Mittal, which has a major presence in Spain.

In addition to these indirect operations made in the domestic market, Spanish companies have also been purchased directly by Indian companies, as in the case of Hispano Carrocera bought by Tata and the Elsamex Group bought by Indian firm IL&FS.

Moreover, some Indian companies have begun direct investment processes in Spain; Greenfield projects, in sectors with a high technological content and high value-added, such as Suzlon in the renewable energy sector and the Ranbaxy company in the pharmaceutical sector. From 2003 to 2010 India has announced 8 Greenfield projects, with an estimated investment of 474 million euros and the creation of 1,472 jobs (source: FDI Markets, 2010)

A total of 39 Indian companies have an investment presence in Spain, through 100 subsidiaries. Together they account for the creation of 10,000 direct jobs and a very significant amount of indirect employment.

Foreign Direct Investment (FDI)
Despite this significant presence of Indian companies in Spain, the figures for investment remain modest. During the 1993 to 2009 period, foreign direct investment flows (FDI) were estimated at 651 million euros. Worthy of special mention is one Indian investment made in the Spanish construction sector in 2007, which was worth 596 million euros and accounted for 1.6% of total incoming FDI in Spain that year.

By Autonomous Regions, the Basque Country comes in first as the main receiver of FDI, also as a result of that major operation registered in 2007. The Madrid region and Catalonia come in second and third places for incoming investment.