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‘Africa-focussed Indian firms should be aware of regulatory changes’

By IANS,

New Delhi : Indian companies looking to venture into Africa should team up with a local business partner who has a successful track record and is abreast with the changes in the regulatory environment, says Robert Applebaum, a partner at one of the continent’s largest law firms.

“To Indian investors I would say don’t be stupid. Find a decent partner who knows the terrain and use them,” said Applebaum who heads the mergers and acquisition practice at Webber Wentzel that has a presence across major economies in the region.

Applebaum says companies need to make a small start first and not throw “huge sums initially” and while doing so be aware of the changing regulatory environment in the continent which is fast catching up with that of the best in the world.

Trade between India and Africa is currently at around $45 billion and the Indian government is aiming at reaching $75 billion by 2015.

“If you look at how African tax regimes are catching on, changing and becoming more advanced and more first world. Transfer pricing norms have kicked in, competition law has spread like wildfire and all the African jurisdictions are coming out with their version of it.”

Applebaum, whose firm has advised several blue-chip Indian companies like State Bank of India, ICICI, Tata Group, GMR, Essar and UB Group, says the emergence of Indian and Chinese companies in the continent has changed the business horizon and thinking among policymakers.

“There has been a major shift in thinking among leaders of African countries if you ask me. There is now more openness, more transparency, more democracy, more corporate governance,” said Applebaum.

Looking at opportunities outside their domestic market, about 79 Indian companies are estimated to have picked up a stake or acquired African companies across many sectors.

However, they still fall short of Chinese investments which are mainly in securing mineral resource assets.

“There is a lot of M&A (mergers and acquisitions) opportunity. Chinese companies have been more nimble footed. Indian companies have been slow off the block and some opportunities have been missed,” said Applebaum.