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Business

Opinion: Tata's Takeover

Indian conglomerate Tata is buying Britain's carmakers Jaguar and Land Rover from Ford for $2.3 billion (1.5 billion euros) in cash. There's no reason to be worried about this, says DW's Karl Zawadzky.

Opinion graphic

Think about India, and the subcontinent's great poverty quickly come to mind. Think about carmakers Jaguar and Land Rover, and you picture luxury. The two high-end brands will now become Indian as struggling Ford, which needs money to secure survival of its core business, has found India's Tata as a buyer.

Karl Zawadzky

Karl Zawadzky

It's a risky transaction, but it's also a great chance. So far, Tata has mainly produced small cars for Asia and presented the world's cheapest car, Nano, a few months ago. The company can now save on time-consuming and expensive research and development and join the global market's premium class -- on par with Daimler, BMW and Audi.

But the takeover doesn't just fit into Tata's expansion strategy. It's also an extraordinary example for the increasing importance of products from emerging economies on the global market that do not fit into the picture of developing countries that's still held by many.

Without a doubt, India remains a developing country with several hundred million people still living in absolute poverty. No other country has more misery than India. But at the same time, India is a global leader when it comes to computer software. Planes and nuclear missiles are built there.

In India, Tata carries the same weight and importance as Krupp or Thyssen used to in Germany. The conglomerate has revenues of more than 20 billion euros ($30.78 billion) and includes steel mills, food production, hotels, mobile telecommunications -- and cars. Tata is among the six largest producers of trucks and busses and is expanding its car operations from South Korea to Europe and America. Tata has long had a presence in Europe with the British-Dutch steel maker Corus and will now enter the market with high-priced cars.

In the old days, a clear separation of duties existed as far as economic ties between industrialized and developing nations were concerned. The latter exported raw materials and tropical food products while the former delivered infrastructure, cars, machines medication and the like.

That separation is fast disappearing. Large developing countries -- especially China, India, Brazil and South Korea -- have become industrialized nations, at least in part. They're no longer competitive just because of their cheap prices, but also because of good quality and their financial power.

Computer hardware now comes from China and Taiwan, Brazil is exporting planes, South Korea offers flat-screen televisions. Several hundred European firms are already Chinese-owned; India's Lakshmi Mittal heads the world's largest steel group; Tata invests in Europe in a major way and others will follow.

Of course there's no reason to be against this -- especially in the case of Jaguar and Land Rover. Only the owners will change, while the production remains in Europe and both firms will surely be able to increase their turnover in Asia.

Karl Zawadzky is DW-RADIO's business editor (win)

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