Decoding the mystery of MNC exits from India https://www.businesstoday.in/opinion/columns/story/decoding-the-mystery-of-mnc-exits-from-india-343768-2022-08-04
Companies have left India for various reasons. In the case of some companies, the decision to leave India was attributed to a multi-nation strategy to get out of non-profitable operations and focus on easier markets.
one would expect India to top the list of multinational corporations scouting for an investment destination...despite the red carpet, liberal policies and incentives, it is also true that India has not exactly been a happy hunting ground for several other MNCs. The government revealed in Parliament in December last year that as many as 2,783 foreign companies and their subsidiaries ceased operations in India between 2014 and November 2021. Some of the notable exits include Cairn Energy, Holcim, Daiichi Sankyo, Carrefour, Henkel, Harley Davidson and Ford... In India,, MNCs have exited due to arbitrary tax regime, accumulated losses, over capacity, land acquisition issues and lack of expected growth due to market anomalies. In case of some companies, the decision to leave India was attributed to multi-nation strategy to get out of non-profitable operations and focus on easier markets. Then, there were some auto players that set up base in India and brought technology and products that had stopped selling in global markets. While they received initial success and paid little attention to upgradation, the domestic firms started making better products slowly and steadily. As a result, the MNCs were eventually pushed out.
there are also some rare cases.. the latest such case is that of German wholesale giant METRO Cash and Carry. The company has grown in a robust manner, forged strong partnerships with local kiranas and made steady investments in store expansions and digitalisation. Its deep commitment to domestic customers can be gauged fact that it has stayed in India for the past 19 years despite running losses for 14 consecutive years. Having turned the corner, it’s reportedly making profits for the past four years and its B2B operations across 31 stores have immensely benefitted small retailers...In balance, considering METRO has done all the hard work and now understands the Indian market and customers at par with its rivals, stitching up a partnership with a strong local player seems to be a better option since it can now expect strong returns on its past investments. Whatever the outcome of the strategic review, the company will face headwinds, even though it is obvious that the public rumours and attacks do not have any basis.