He didn't become one of the world's richest men, and by far its biggest steel baron, by shying away from controversy. Even so, the Indian-born businessman Lakshmi Mittal says he was taken aback by the fury that greeted his announcement in late January that he was bidding to buy European steelmaker Arcelor, formed in 2002 out of what was left of the French, Luxembourgian, Belgian and Spanish steel industries. "We really didn't expect such a violent reaction," Mittal told Time. "A lot of people were obviously not happy at all."

No kidding. Some European governments still see a locally owned steel industry as a sign of economic strength, but even so, the reaction to a company thought of as Indian buying up metalworking assets was extraordinary. It went far beyond any limits of supposed industrial logic and, at times, involved attacks of a distinctly ugly nature. In Luxembourg, where Arcelor is based, Prime Minister Jean-Claude Juncker called for "a reaction that is at least as hostile" as the bid, and parliament considered a new merger law that would block the deal. In Paris, Finance Minister Thierry Breton lambasted Mittal's decision to make an unsolicited bid, accusing him of having "a grammar problem," while President Jacques Chirac searched for ways to stop the takeover. One former French Prime Minister, Michel Rocard, wrote an angry screed entitled "Europe Should Say No," that advocated the introduction of a blanket ban on acquisitions by non-Europeans. At Arcelor itself, chief executive Guy Dollé slammed Mittal Steel as "a company of Indians" that was offering "monkey money" for his firm, which he described as "perfume" compared to the "eau de cologne" of his rival.

Perhaps predictably, the takeover battle was long-drawn- out. Mittal had to up his offer to shareholders twice, raising the value of the deal by more than 40% to an eye-popping $33.4 billion, and he changed the ownership structure of the firm to reduce his family's dominant stake. But in late July, almost six months after his initial foray, Mittal had his prize. He admits that the personal attacks were wounding. Yet ultimately they came to naught: through sheer obstinacy and financial savvy, Mittal, 56, overcame every sort of political, personal and financial objection to forge a global steel titan, a 120-million-ton-per-year company whose vast size and range, in theory, should enable it to ride out the ups and downs of a notoriously cyclical industry.

The din from that battle has died down, but its significance continues to resound. For, by taking on the European political and business élite — and winning — Mittal demonstrated in a stunningly audacious way just how much the world has changed. Here was an upstart intruder from a country long classed as part of the developing world, scooping up a European gem that Dollé at one point (though perhaps unwisely, given later history) described as the Airbus of steel. And Mittal, assuredly, is but the first of many. Indians, Brazilians, Chinese, Russians and other entrepreneurs from emerging economies are now jostling for assets all over the world as they seek to become global players. As 2006 was drawing to a close, two other steel titans, one from India, the other from Brazil, were locked in a multibillion-dollar battle for an Anglo-Dutch firm, Corus, while Evraz, a Russian company controlled by billionaire Roman Abramovich, agreed to buy the U.S. firm Oregon Steel Mills for $2.3 billion to create the world's biggest producer of rails.

Globalization, it turns out, means what the word implies. It is not just a ploy by domestic companies in the rich world to boost profits by outsourcing work to call centers and low-cost factories overseas. It involves a transformation of economic relations, not only because processes can be shifted from one nation to another, but because ownership and control of crucial economic assets is becoming ever more widely distributed. Though the Industrial Revolution's crucible 200 years ago was the Atlantic world, there has always been economic activity and wealth elsewhere. Now, investors and entrepreneurs from anywhere can hazard their skills and fortunes wheresoever they choose. Colette Neuville, a French shareholder activist, says of Mittal's bid: "It was a shock to discover that there are companies in places we used to refer to as the Third World that have become equal partners, or more than equal partners. Nobody had quite imagined that."

They won't make that mistake again. For delivering such a lesson, and for doing it with good humor in spite of sometimes odious personal attacks, Lakshmi Mittal is Time's International Newsmaker of the Year. "Whether I'm Indian or the citizen of another country is irrelevant in this global environment," he says.

In truth, Mittal is almost as European as he is Asian. He was born and grew up in a modest but well-connected family in Sadulpur, in the northwestern Indian state of Rajasthan, but his business empire has been constructed entirely outside India. Mittal began making his fortune a decade ago after breaking away from his father's Calcutta-based steel business and building his own firm, buying up steel plants in countries ranging from Algeria to Kazakhstan, Ukraine and the U.S. His timing was brilliant: worldwide demand for steel has been soaring because of massive demand from China and other fast-growing economies, and with it so has Mittal's net worth. By 2005, his personal fortune was estimated to be $25 billion — more than twice the size of Luxembourg's annual budget. Before the takeover, Mittal Steel was based in the Netherlands (as a result of the merger, the headquarters is moving to Luxembourg), and quoted on the London Stock Exchange. Mittal lives in London, in a 12-bedroom mansion in Kensington Palace Gardens for which he paid a cool $128 million, and in 2004 he threw a $50 million party for the wedding of his daughter Vanisha at the Versailles royal palace and another chateau.

Ask those who follow Indian business, and many will stress Mittal's global links. "Mittal is not really Indian. He's floating somewhere above India Inc.," says James Winterbotham, founder of London-based merger consultant India Advisory Partners. But in one sense, he is very Indian indeed, for a host of companies from the subcontinent are now getting into the global game. Even excluding the Mittal-Arcelor deal and the pending bid by Tata Group for Corus, data compiled by Winterbotham's firm shows that Indian companies spent about $6.5 billion on international acquisitions in 2006, almost triple the volume of the previous year. And this new prominence on the international stage is winning plaudits back home. "Lakshmi Mittal has done an extraordinarily good job for us," says Venugopal Dhoot, chairman of Videocon, whose businesses run from consumer electronics such as televisions to oil and gas production. "The world had questions about the ability of Indians running a global company. He's shown them."

Mittal himself credits his son Aditya with the idea of buying Arcelor. They first discussed the possibility in 2005, while in the midst of acquiring a Ukrainian company, then drilled into the detail of a possible bid last December, during a family skiing holiday in St. Moritz. On Jan. 13, Mittal made an informal approach to Dollé over dinner at his London mansion and, when Dollé gave a noncommittal answer, he took his bid directly to shareholders.

Personal lobbying helped to overcome some political obstacles. For weeks, Mittal made the George V Hotel in Paris his home base, jetting around Europe to shake hands and put his case to anyone who would listen. Critically, labor unions weren't hostile; they had already worked with his company and knew what to expect. And Mittal won a powerful French ally early on: François Pinault, a fellow self-made billionaire whose holdings include luxury designer Gucci. Pinault was appalled by the reaction to the bid. "I didn't like the welcome he received in France, nor the xenophobic, even racist character of certain comments about 'the Indian,'" explained Pinault, who joined Mittal's board and introduced him to the cream of the French business establishment. "Pinault really supported me," Mittal says today. "He kept saying that if you have a strong rationale and industrial logic, you will win."

In the end, Mittal proved a smarter tactician than his opponents. Because a formal takeover document needed to be acceptable to regulators in five different countries, it took four months to put the paperwork together. That allowed Arcelor time to rally shareholders in its defense. But then Dollé made an egregious error: he arranged for a Russian oligarch, Alexei Mordashov, to take a 30%-plus stake in Arcelor. "The day we received that news, we felt it was over for us," Mittal recalls. "The whole team was disappointed and somber." But when they looked at the Russian deal more closely, Mittal and his advisers realized that Arcelor was essentially giving away the company without proper consultation with its own shareholders — and to a little-known Russian with far less of a track record than Mittal. His investment bankers sprang into action and helped foment a shareholder revolt that drove Arcelor into Mittal's arms.

Happily, even before the deal was finalized, some of the heat had gone out of the controversy. At a hearing at the French Parliament in June to which Mittal was invited, one deputy, Paul Giacobbi, described the personal attacks as "shameful" and said they did not represent the view of France. And Patrick Ollier, the head of the finance committee, said that the Parliament "has had the opportunity to get to know a great European captain of industry."

As it happens, though that may have been intended as a compliment, it is inaccurate. It would be just as wrong to say that Mittal is a great Asian captain of industry. For he is of course both — and neither. Mittal is an exemplar of a new type of business leader. "Your identity is your company," says Mittal. "I have a global company, so I have a global identity." In 2007, expect more to make the same argument.

• PETER GUMBEL
• Steel baron Lakshmi Mittal won a takeover battle — and taught the world a lesson