November 2015 | Richard Young

Beyond the present lay long-term gains

Europe presents a fascinating challenge to businesses and politicians alike as it struggles to retain its position in the new global economic order — and Tata is working alongside key influencers to lend a helping hand

The past 12 months have been tumultuous for the European Union (EU). With conflicts in the Ukraine and south of the Mediterranean, economic upheaval in Greece, increased pressure from migration and concerns about the political and financial viability of the Eurozone project, no one can doubt that these are ‘interesting times’ for policymakers.

Bad news grabs headlines, of course. But Europe still includes many of the world’s most developed economies. It has an educated workforce and many top-ranked universities. European countries have strong historic and trading links globally. The EU market comprises 500 million people. Most European countries, and all of Tata’s top markets in the region, are EU members. The EU plays a big role in regulation affecting business, from labour laws to environment protection, and in concluding trading agreements with other countries and regions. EU legislation and agreements are prepared by the European Commission, which under its new president, Jean-Claude Juncker, is committed to a more business-friendly approach and new measures to promote economic growth. These initiatives present an excellent opportunity for Tata businesses to engage with policymakers.

The European Union by numbers
EU’s combined 28 states (EU-28)
Population 514 million
Median age 42.4 years
Unemployment 9.9%
GDP $18.2 trillion
GDP per capita $39,200
Public debt (% of GDP) 92.1%
Electricity production 3,260 billion kWh
Exports $2.17 trillion
Imports $2.31 trillion
Largest company Royal Dutch Shell (oil and gas)
Sources: CIA World Factbook; Eurostat; CNN; Fortune

The public affairs agenda
The UK is Tata’s largest market and base in Europe, but is not the only European country of interest to the group. Germany is potentially a big market for Tata — and a gateway to central and eastern Europe. Tata also has strong historical connections with France and some of its companies’ biggest customers are there. With the acquisition by Tata Consultancy Services (TCS) of Alti in 2013, the company expanded operations in France and added to its ‘francophone capability’. TCS and Tata Steel have a large presence in the Netherlands, and Tata companies are present across the continent.

That means Tata’s bigger companies in Europe have their own public policy teams to support their business aims through engagement with national governments and European institutions in their roles as enablers and regulators, and potential customers and sources of finance. Tata Steel and its predecessors, for example, have long had excellent relations with stakeholders in the Netherlands. As companies entered new markets, they quickly developed relationships as valued investors.

Since last year, with the creation of a small European policy team in Tata Limited, the group has been playing an enhanced role in supporting companies’ efforts, particularly where they do not have a dedicated public policy presence, as well as strengthening the group’s profile with key stakeholders. The ability to influence policymaking in Brussels (the seat of European policymaking) is especially important because the new European Commission has set priorities that are at the heart of Tata’s capabilities and interests. Among Jean-Claude Juncker’s priorities are infrastructure investment, digital development and a stronger industrial base, where Tata has much to offer.

Another big advantage of a group-level public policy platform is that when other Tata businesses want to break into the EU as a market or to set up operations, the team can help engagement at the highest levels.

One dynamic that’s much more important is the keen interest in working with India. Businesses and governments have watched their relationship with China evolve over the years, which has made them think more proactively about working with India.

European policymakers no longer see the EU as the centre of the world. There’s real appreciation that we live in a multi-polar world. So, while free trade has been welcomed in the high offices of Europe, there’s now a push to deliver agreements to cement it globally.

The EU looks East
EU politicians and officials are looking east as part of that push. Their interest has been stoked by the election of Prime Minister Narendra Modi, whose reforming approach has caught the eye of many in Europe. That hasn’t, as yet, translated into concrete free trade agreements, but we see more and larger deals hit the headlines.

Indian officials and businesses have an opening, and the Tata public affairs teams are working hard in Brussels and the UK to make the most of that. Chinese businesses have been very proactive in developing those links, and Indian industries are increasingly pushing to develop their own opportunities.

This comparison might hint at a recipe for success as Tata extends its reach in Europe. Traditionally, many Indian businesses have been tactically very strong and seized opportunities when they arose; China, culturally, tends to play a longer game and develop more strategic partnerships. Tata, in that sense, has a built-in advantage: its long-term vision is more clearly part of the culture of the businesses.

It’s vital to look beyond short-term headlines and think about the long-term game. The EU has its tricky moments, but it will stay a powerful economic force and, as it evolves, Tata needs a clear voice in its highest offices.