Hollywood turns to Bollywood

By Ben Yearsley | 26 Jun, 2008 

It was reported recently that Steven Spielberg’s DreamWorks studio is looking at a possible joint venture with Reliance, one of India’s biggest companies. This is further evidence of the growing dominance of Indian companies in the global market place. In recent years we have had British Steel and Tetley Tea taken over by Tata who have also recently purchased Jaguar and Land Rover from Ford Motors. 

Increasingly many developing countries and also companies in these countries are playing an important part in the fortunes of western companies. There are many reasons for this, currently the credit crunch is having a large impact as many companies, banks especially, are seeking new finance and it is often Middle Eastern or Asian companies and sovereign wealth funds that have the necessary resources to help out. However, more positively, many western companies are seeing the huge potential available in countries such as China and India for money making over the longer term. I would imagine that is one of the reasons that Steven Spielberg is looking to tie up with Reliance.

Having just returned from India on holiday it is clear the long term potential is huge. What is needed almost more than anything else is huge infrastructure spending. The last day I was in Mumbai there was rain and I am not joking in saying the whole city appeared to be under a foot of water. For all the high tech software companies found in Bangalore, and all the outsourcing deals, the bare essentials are needed in many places. As India continues to grow in wealth, more and more money will be spent on construction and development, bringing larger parts of the country into the 21st century. This is just one area fund managers could invest in for the foreseeable future. As an investor in Indian funds, I expect volatility in these markets, but I can also see the long term money making potential.