There is lot of buzz about Mittal Steel’s attempt to take over Arcelor, in other words largest steel company taking over second largest steel company, which will make the company larger than next three competitors together. Amazing! Although it is truly european company taking over another european company, racism has been incensed by europeans, since the former one is possessed by Indian industrialist.

Technically and strategically it is one of the best move to organize commodity business of steel. All industrial analysis and practices support it, the fact that shares of these companies have gone higher after the declaration. But it is old protective mentality shown by french as well as luxemburger prime minister showing unnecessary nationalism. Mittal Steel, mostly owned by Mittal Family, the prime of the family Laxmi Mittal possess indian passport, lives in Central London and his company is registered in Rotterdam, having absolute international management team on his board. Whereas Arcelor came to being through merging of major european steel industries from Spain, French, Belgium and Luxembourg, where Luxemburg government hold largest share of 5.8% in the company. Mittal Steel is huge empire covering 5 continents, still it is truly european company. It is of benefit for Europe, which wants to survive in old industrial powers during the time of aging economies.

The demand for steel is going higher, as India and China are booming with growth-rate of 8%, i.e. the prices for steels r much too high. Steel industry is still more scattered, in the sense that if this deal fructifies, the combined company will still have share of 10%. But less players in the field means better consolidation to regulation of prices, which in end effect push economic growth. This is the simple logic I can put forward.

It has become the question of national pride, since this deal lauds racism on european side and in the forthcoming India-EU meet, this will take diplomatic mold. It is quite clear how european companies are readily taking over asian companies, then why not asian companies, in fact in this case asian industrialist with european company can take over european company. Commerce and Industry Minister of India Kamal Nath shot off a strongly worded letter to the EU Trade Commissioner Peter Mandelson on Wednesday, raising doubts over EU’s commitments to World Trade Organisation. Nath warned Mandelson that ongoing trade talks in the WTO could be ‘adversely impacted’ if the principle of national treatment (that requires foreigners to be treated like locals in various matters of trade) was not applied to Mittal’s takeover bid. “Anything that vitiates the principle of national treatment, could adversely impact the ongoing trade talks. This is one of the basic principles of the WTO multilateral trading system. It requires that equal treatment be extended to all cross-border investments,” official sources told Business Standard. In fact, The national treatment clause is an obligation on members and is enshrined in Article III of GATT 1994. It condemned discrimination between foreign and national investment, and products and services, the sources added. The forth-coming visit of french president Jacques Chirac will definitely heat up this discussion to upper level. It is interesting to see how it will affect the approach of european populist towards whole of Asia.

The Luxembourg prime minister Jean-Claude Juncker said, “The [Indian] government, although full of wise men, has just threatened the Grand Duchy with not ratifying a double-taxation agreement between India and Luxembourg”. But in my opinion the greater threat India can give to whole EU, if she says of rethinking of buying multi-billion dollar Airbus planes. In last Paris Aerospace Show, indian airliners had ordered more than 200 planes, mostly from Airbus. They have choice of choosing Boeing, which will definitely make whole EU to rethink of its attitude towards this bid and respecting India as a whole. Who knows, maybe this idea will be put on the paper during discussion with EU Commissioner on fair-trading issue.

There will be many such acquisitions in the future, and I’m ready to enjoy political battle between past-colonist and past-colonialist. 😀