America and India have never been economic competitors. Throughout the 1950s/60s we were supplicants for foodgrains and arms, a poor country pitied by America.
When, through the 1970s/80s, we developed a Soviet-implanted spine, we became cold war adversaries. We thumbed our nose at Uncle Sam, detonating a nuclear device, engineering a green revolution to become self-sufficient in food, and liberating East Pakistan (now Bangladesh) in the teeth of American opposition. We stocked up on Russian armaments.
Come 1990s, the world deconstructed. The Soviet Union and the Berlin Wall collapsed, making America the sole superpower. But then China began rising as a challenger, while India teetered at the edge of bankruptcy. That’s when we did a major pivot, opening our economy to a flood of American dollars.
From Supplicants & Adversaries to Strategic Partners
Now we were neither supplicants, nor adversaries, but strategic partners of the Yankees. We blossomed, becoming the fastest growing large economy on earth. We signed up for the highest number of H1B visas, feeding America’s technology revolution with a furious pipeline of high-quality talent. We sent the largest number of foreign students to US universities. Our IIT/IIM alumni became CEOs of storied American multinationals. We doctored and nursed the USA.
We mounted joint military exercises, co-authored the Quad to keep a check on China, and won a nuclear endorsement from Uncle Sam. Indian Americans became the wealthiest, most admired minority. American companies invested in hordes in India. Heck, we also became the fastest growing iPhone exporters on the planet.
It was a partnership made in heaven, a true win-win, with nary a conflict, wrinkle, or crinkle. America and India were getting along swimmingly!
But Then Trump Weaponised Tariffs!
Along came Donald Trump, and the worm … errr world, turned again. He weaponised tariffs and aimed the most lethal shot at – you won’t believe it – India! Suddenly, the globe’s most hassle-free partnership got entangled in a web of conflicts, wrinkles, and crinkles. Suddenly, ordinary Indians – exporters, students, start-ups, techies, tourists, CEOs, professors, doctors – became acutely vulnerable, felt abandoned.
“How can we compete with America, our biggest benefactor? How can we take on the leader of the world, who sets the standards for us to adopt and follow?”
The fear and dejection among India’s America-facing cohort are palpable.But I daresay that most of the scare is premature, even overblown. There are several areas where India, a later blooming economy, powered by an astonishing digital heart/engine, is eons ahead of America, which is tethered to hidebound and outdated structures. I shall narrate one such real experience that I’ve weathered myself.
A Valuable Acquisition That Was Crudely Neutered!
Over a year ago, I spotted a highly unusual, but attractive, investment opportunity in a Nasdaq-listed company. It was a hundred-year-old newspaper business, with a market-leading presence in more than 25 states in America. Like every struggling newspaper operation, it faced a daunting challenge – either perish with crumbling printing presses, or transition to a digital-only future with paying subscribers.
Of course, that’s easier said than done. A legacy, old-world champion rarely has the smarts and savvy to become a new-age technology whiz. Most die or get sold in the process. This company was making some headway, but success looked like a fifty-fifty bet. Its print sales were shrinking faster than digital revenues were growing. The balance sheet was clobbered by debt. Which is why its stock was dirt cheap – the total market value of the business was about a tenth of revenue!
My entrepreneurial antenna got tickled by this signal. Could this be a deep value, synergistic acquisition, to complement our Indian operation, creating a unique digital news corridor between America and India, two of the most vibrant economies in the world?Without a second thought, I jumped at the deal, acquiring nearly 15 percent of the listed stock. Under India’s liberal Overseas Direct Investment (ODI) policy, I could use 400 percent of our net worth to fund this strategic purchase. So, we had access to enough and more capital to pick up a much, much bigger chunk of the company.
Suddenly, my phone rang. The agitated CEO of our target company was on the line. “What’s your objective? Are you trying to do a hostile takeover?”, he stiffly asked. I calmly replied that we had no such sinister intention. “We see a massive upside potential in your stock; plus, we are doing the same business in India, and there could be synergies we could exploit together”, I said hopefully. “So, are you planning to buy more of our stock?”, he asked. “Yes”, I replied very innocently.
The Pill That Poisons American Regulations
I had no clue that I had triggered an earthquake. Within 24 hours, the target company enforced what’s called a “poison pill”, or a special shareholders’ rights plan. So, if we now bought one more share, the company could issue free shares to all other shareholders, except us, and dilute us down to 10 percent. Just like that! And it could do this repeatedly, ensuring we had no chance ever of taking our shareholding above 10 percent. This was an incredible pro-management, anti-shareholder provision, almost medieval, like creating blood-thirsty, unaccountable feudal lords with unlimited powers to suppress poor peasants.
Once I got over the shock, I marvelled at India’s regulations, which are so modern and democratic. No Indian company can issue an asymmetric rights issue, disenfranchising one shareholder and enriching others. No Indian company can stop a hostile takeover; as soon as the acquiring shareholder picks up 25 percent, she/he must make a mandatory open offer to buy another 25 percent from minority owners. Often, stock prices leap, rewarding small shareholders with big gains and exit rights.What we have created is an emancipated shareholders’ democracy; what prevails in America is exploitative, expropriatory medievalism. And this is but one example. There are several others to prove that India is devising modern, fair, and competitive market regulations.
So, there’s no need to get overawed or bullied by Trump’s America. Equally, there’s no need for any polemics or harsh riposte. We just need to stand our ground, stoically and resolutely.