So, Honda has decided to exit Hero Honda. The 26-26 joint venture between the Munjals and Honda dates back to the 1980s when the first wave of liberalisation took place. Apart from Honda, two other Japanese motorcycle makers had come to India at that time: Suzuki with TVS and Yamaha with Escorts. In the past, there has been talk, more than once, that the two partners will go their separate ways.
About ten years ago, Honda had set up a fully owned subsidiary that made scooters to begin with and later motorcycles too. This added grist to the rumour mills. But the two partners stuck together and proved their detractors wrong. This time the breakup seems to be final. The fine print of the divorce papers is not yet out. Maybe Hero Honda (or whatever it is called once the Japanese partner pulls out) will be able to source technology from Honda for some more time in the future.
In the Hero Honda case, there has been no uproar so far from the swadeshi lobby. Nobody seems to be outraged that a hugely successful (Hero Honda lords it over 50 per cent of the Indian motorcycle market) and profitable enterprise has been left in the lurch by a foreign company. When Honda had exited from Kinetic some years ago, various industry associations had swung into action to protect the interests of Indian businessmen. In comparison, there isn’t even a murmur of protest this time. The conclusion is fairly straightforward: Joint ventures have lost their relevance for Indian businessmen as well. As a business model, the joint venture is truly dead and gone. The Munjals are not talking about life after Honda right now. But clearly they are ready to ride on their own.
In a way, the playing field between Indian and multinational corporations has been levelled. The advantage of size that the multinational corporations had, which looked so intimidating a decade ago, no longer scares Indian businessmen. Investment bankers say that there aren’t too many queries from Indian businessmen for joint ventures with multinational corporations these days. Collaboration for specific projects is fine, but joint ventures have gone out of fashion. PricewaterhouseCoopers’ Deepak Kapoor says this is a signal Indian business has finally come of age — the newer generation of cocky entrepreneurs does not want to be dependent on overseas partners for success. Most of them want to be in full control of their businesses.