When Ratan Tata said last week that he’d walk away from his investment in Singur if Bengal didn’t want his business, Mamata Banerjee thought he was trying to strike a cheap political bargain and went ahead with her protest against Tata.

It’s a miscalculation of gigantic proportions. Tata’s was no bluff. Because he knows something that Banerjee has not understood: it’s not only because other Indian states want the investment and prestige of having the Nano to roll off their roads; it’s because other countries want to make world history and would give anything to have India’s star innovation manufactured on their soil.

Banerjee’s actions will only precipitate a worrying trend — a second brain drain from India. Only this time it’s not brilliant individuals leaving the country in droves for greener pastures, but brilliant corporations.

Thirty years ago, bright young Indians —engineers, doctors, academics — fled India because they were too qualified for the domestic environment. Thirty years later, the same pattern is being repeated, this time with companies. Having reinvented themselves after decades of protection, they’re hitting a wall at home. They’ve become world class, sometimes even best-in-class with innovative products, global accounting systems and internationally feted managers. But like their individual counterparts, they’re now over-qualified, restricted and just plain unappreciated.

In the last 18 months, Indian companies have spent $35.6 billion in 411 overseas acquisitions, pushing them near the top of the global M&A charts. Tata acquired western giants like Corus and Jaguar-Land Rover, Hindalco acquired Novellis, Mahindra bought 51 per cent in China’s Jiangsu Yueda Yancheng. Anil Ambani is about to finance Hollywood icon Steven Spielberg. An August 19 report by KPMG says in the last six months, the most active companies from emerging markets making acquisitions in developed economies, are Indian — way over Russia and South Korea. India, stated the study, is a ‘net deal exporter.’

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