MUMBAI - Some of India’s corporate crown jewels are on the block: Mukesh Ambani’s Reliance Industries and the Tata group want partners for businesses ranging from oil and chemicals to consumer technology and passenger vehicles. Their ability to raise capital, mostly to pay down debt, will be a key measure of how attractive India will be to foreign investors after the coronavirus clears.

The nation of 1.3 billion will have to stretch to provide extensive support to its people and companies. A relief package announced on March 26 was worth about $23 billion, 0.8% of GDP. More help is expected but will pale compared to the 10%-plus of GDP that Singapore and the United States have promised. That raises doubts about how well India’s long-term pulling power will hold up.

Three deals will provide a clue. The first is from the $3 billion Tata Motors. The owner of Jaguar Land Rover specialises in commercial vehicles and wants a partner for its passenger segment. Tata Motors had finally started to make decent models for the local market when new emissions standards and higher insurance costs crushed demand. The car business was breakeven at the EBITDA level in the year to end March 2019 but should be a draw given India might have just 22 cars on the road per 1,000 people. Germany’s Volkswagen had previously explored a partnership to jointly develop a car.

Next up is Ambani’s upstart telecom operator Reliance Jio and its related digital services covering some 370 million users. Facebook was keen on a 10% stake before the pandemic, the Financial Times reported in March. Others will want a look: Ambani is expected to emerge as the king of the Indian consumers. The unit was valued at $70 billion by CLSA analysts late last year.

The third deal was half done. Saudi Aramco was planning to pay $15 billion for a 20% of Ambani’s oil-to-chemicals business in a transaction that would pair the lowest-cost oil producer with one of the largest and most complex refinery operations. Investors are waiting to see if Aramco honours the non-binding terms or renegotiates on the back of new assumptions over medium-term local oil demand.

It’s rare to see these two titans of Indian industry selling pieces of their prized possessions. Global appetite for their offerings will go a long way to reaffirming India’s hot-or-not status.

CONTEXT NEWS

- India’s Tata Motors on March 27 announced a plan to carve out its domestic passenger vehicles business into a separate subsidiary.

- The move will be the first step towards securing strategic alliances which will provide access to products, capital and more, the company said in a statement.

(Editing by Rob Cox and Sharon Lam)

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