Indian Direct Investment in Developing Countries: Emerging Trends and Development Impacts

Abstract

This study has analyzed the overall and regional trends in Indian direct investment flows into developing region since 1960s and explored various development impacts they have on host developing countries. Evidence tends to indicate that developing region was the initial destination for Indian outward investing firms and continued to receive their attention over time. Developing region bound Indian FDI, which was led by a small group of Indian firms in a few selected developing countries in 1960s-80s, is now giving way to a more extensive pattern with large quantum of outward investment. A large number of Indian firms are undertaking increasing investment activities across different sub-regional developing groups and for a variety of firm-specific motivations. The fact that developing region oriented Indian firms are operating in knowledge-based industries and are undertaking local production activities than simply performing sales promotional functions, their presence could be critical for host developing countries aspiring to build their domestic capability in such technology-intensive industries.

Keywords: FDI, India, developing countries

JEL Classification: F23, O18, R1