The Rise of Indian Multinationals: Explaining Outward Foreign Direct Investment from India

Michael W. Hansen

Chapter 2 in Institutional Dynamics and the Evolution of the Indian Economy, 2009, pp 31-62 from Palgrave Macmillan

Abstract: Abstract Many years of mediocre performance of Indian industry has recently been replaced by a newfound optimism. Indian firms appear to be reasserting their role in the global economy, and global investors now see India as one of the main investment destinations of the future. That developing countries, like India, are attracting interest among foreign investors is not new. The new thing, however, is that developing countries themselves are becoming sizable foreign investors. In the last few years, India has seen an astoun ding growth in out ward foreign direct investment (OFDI): While inward FDI (IFDI) doubled between 2004 and 2006, OFDI grew four times in the same period.1 World class newcomer Indian firms are moving massively into IT and services in developed countries, and incumbent Indian houses are diversifying into the knowledge industry and/or acquiring the crown jewels of European and US manufacturing industry at intensifying rates. In industries such as pharmaceuticals, software, IT, telecommunications, and transport, Indian MNCs base their investments on advanced tech-nologies2, high knowledge intensity3 and on cutting edge strategies and organizational modes.4 Even within the traditionally highly protected Indian manufacturing industry we have seen a range of Indian manufacturing firms becoming global leaders in their industry.5 Thus, it appears that India is in the middle of an OFDI takeoff.

Keywords: Foreign Direct Investment; Asia Pacific Journal; Outward Foreign Direct Investment; Strategic Asset; Indian Firm (search for similar items in EconPapers)
Date: 2009
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DOI: 10.1057/9780230620131_2

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