<div>Indian companies trying to raise money for expansion will probably increase their hunt beyond the borders. <br /><br />Despite all the pressure, the Reserve Bank of India (RBI) refused to reduce interest rates citing concerns of inflation, falling rupee and rising prices of food. <br /><br />Domestic industry has reacted sharply by using strong words. In its reaction the Confederation of Indian Industry (CII), all but rejected RBI’s take on inflation situation. “Inflation is on a downward trajectory and core inflation, which reflects demand side pressures on the economy, has dipped to more than three year low,” says the statement from CII. The industry body hopes that, “The RBI would not wait for the next quarterly review, but intervene sooner if the economic condition warrants a mid-course correction.”<br /><br />The timid consumption trend in domestic markets is forcing a lot of companies to hold on to their expansion. No one wants to risk in fresh investment at high credit rates especially when consumers remain pessimistic about the future. <br /><br />Companies that are fortunate enough to maintain some reserves are banking on global expansion and acquisition. The continuing sluggishness in global economy is throwing up affordable target for acquisitions. European and American companies are now more relaxed about being acquired by an Indian entity than even half a decade ago. <br /><br />Apollo Tyres bid to spend $2.5-billion on US’s Cooper Tire and Rubber is a good example of this phenomenon. The company is three times the size of Apollo, but offers growth opportunities outside India. Car sales in India fell 7% last year and a rapid pick up is not expected. Other industries are in similar situation. Industrial growth in April was only 2.3%. <br /><br />According to Thomson Reuters data foreign currency loans from India dropped to $17.3 billion in 2012 from $24.1 billion a year earlier. About $5.4 billion has been raised so far in 2013. <br /><br />Even as domestic rates remain high, the government is working hard to further soften rates for project exporting companies. <br /><br />The Ministry of Finance and Ministry of External Affairs are working on new initiatives to increase the lending by Exim Bank of India at better rates. Under line of credit at low rates, funds are available for domestic companies to set up infrastructure projects in new markets like East Asia and Africa. <br /><br />While the primary motive is to increase its economic influence in target regions, the soft loans for project exports are being targeted by companies keen to grow abroad. Other financial institutions like Export Credit Guarantee Corporation and Indian Infrastructure Finance Company are increasing their play on this front. <br /><br />India companies have a tough time ahead either way. While domestic expansion is on hold, foreign expansion may be the only growth strategy available for the moment. Growth away from home is better than no growth at all. <br /><br />(<em>Pranjal Sharma is a senior business writer. He can be contacted at pranjalx@gmail.com</em>)<br /><br /><br /> </div>