It is not often that a company is able to buy another that is four times as large, but the largest ever overseas acquisition by an Indian company seems all set to succeed with the board of the Anglo-Dutch company, Corus Group, responding positively to Tata Steel's £4.3 billion takeover offer. Tata Steel has a capacity to make five million tonnes of steel a year and Corus about 19 million tonnes; together they will become the world's fifth largest steel maker. That would be a welcome development for the global steel industry, which remains fragmented despite the Arcelor-Mittal merger earlier this year. Interestingly, that merger of two of the world's largest steel producers created a behemoth with a capacity of 109 million tonnes. Like Mittal, Tata Steel is attempting to buy a quintessentially European institution with its shareholders spread across the European Union. Like Arcelor, Corus was the outcome of a merger between companies that were already well known in their respective countries. Mittal had to overcome some parochial opposition that at one stage drew in politicians from France and Luxembourg. Tata Steel's bid has not evoked any such protests. As in Mittal's deal with Arcelor, significant synergies may spring forth from Tata Steel's merger with Corus. Tata Steel will get a foothold in the European markets, where Corus has a strong presence in the value added products such as steel used in automobiles and aircraft. For Corus, the attractions are the large reserves of ore that Tata Steel commands and, more important, the access to the managerial and technical resources of India's most widely admired business group.

The Tata Group's outward looking focus is in ample evidence once again. Almost a third of the group's revenue comes from outside the country. The Group has figured in six of the eight top recent overseas acquisitions by Indian companies. Tata Steel's most recent foray shows clearly that for some of the better-known Indian companies, funding large takeovers is no problem. It comes in a year when Indian companies are emerging as significant players in cross-border acquisitions in the first nine months, they have invested $7.5 billon to acquire some 115 companies abroad, against the $8.3 billion foreign companies have brought in to fund their acquisitions in India. The bid for Corus is a telling demonstration of India's competitiveness in the manufacturing arena. Unlike the software industry, which has benefited immensely from the relatively low cost of skilled manpower, Indian manufacturers are scaling up to the level of world leaders on the back of strong engineering and managerial skills.