Introduction: The Rise of Indian Multinational Enterprises:

Revisiting Key Issues

Jaya Prakash Pradhan and Karl P. Sauvant

Submitted By
Surabhi Sakshi
DPM09.006

This paper talks about recent phenomenon of FDI and mostly OFDIs, their transformations and
its impact on India and how it has led to rise in the MNEs by acquisition and investments.

Different sets of datasets have shown that OFDI growth of India has even left most of the
developed countries behind. The development of OFDI has derived from the rise of firms from
Asian developing economies and India has been at the third place after the United Arab
Emirates and Egypt during 2000–2008 for the growth of OFDI. India ranked among the top ten
outward-investing Asian emerging economies during 2000–2008, and was the seventh-largest
outward investing Asian emerging economy in 2008. This growth of OFDI flow was also
accompanied by increase in numbers of firms which adopted OFDI.

Various international literature has indicated the emergence of Indian firms and their global
presence. With that, these papers have addressed issues of investments, changes in industries
and the motivations of firms in India for their abroad investments. Next, the paper talks about
the origin which started w started with Birla groups in early 1960s at AD al Baba. This trend
was followed by Tata group in 1961 in Switzerland which was marked as the beginning of
OFDI from India. Does we can say that Indian firms word the one who took initiative among
all other developing countries to adapt oh FDI. Although most public sector companies’ world
not part of it. Most large industries world motivated by state regulations but they were limited
by the slow expansion off the domestic market other regulatory measures like monopoly and
foreign exchange regulation act due to which they expanded at their home.

Other factors responsible for promoting national exports overseas word that as mentioned.
Inadequate foreign exchange reserves, weak expertise and knowledge lead to the investment
only via machinery which were home built and through know how. The primary destination
for outward investment what mostly developing regions wait factors like cultural geographical
and ethnic proximity. The industries that dominated the OFDI distribution were mostly
chemicals, papers and textiles. Indian OFDI flows so a massive growth during 1990s and was
considered and was considered factor driven by broadening off industry and geographical
profile of investment.

The wide business now even included gas and petroleum, software and pharmaceuticals, which
became furthermore diversified during the period of 1990-2007. This was followed by intense
competition in Indian market large Indian firms who now which now have to be restructured
and further focused on product specialization, increasing productivity and improving the
quality of product for their markets. This further led to improved bottom lines and higher level
of cash holding and focusing more on research and development as well as technologies.

The paper further discusses the factors due to which Indian firms were able to get alone stand
in the overseas expansions which was initially limited to alliance or a joint venture. This was
mostly done to protect their ownership, have more flexibility and autonomy in global business.
They now, no more wanted to only secure access to new market but also aimed at accessing
new products, markets and distribution channels and other intangibles like skills.

Indian firms acquired overseas companies in order to gain access to natural resources like oil,
gas and minerals for their economic success. The paper has talked about the distinct regional
specialization of Indian firms which is subcategorised into parts, namely “emerging market-
specific Indian MNEs” and “developed region-specific Indian MNEs,”, which is based on the
fact that they are different groups of Indian MNEs that reveal different regional preferences in
undertaking OFDI. It is evident that higher stages of development play host to firms that are
based on powerful and broad-based monopolistic advantages originating from Schumpeterian
frontier innovation, sophisticated product differentiation, and specialized management and
managerial skills. Knowledge-based Industries Dominate and lead Indian Outward Foreign
Direct Investment due to openness to trade and inward FDI and the growing competitiveness.

Analytical Perspectives like that of political factors that influence the trend and direction of
Indian OFDI. Other important factor discussed is that Industry Analysis of Indian Outward FDI
and the lest is that of Regional Studies on Indian MNEs.

Overall, we can say that Indian MNEs are net encouraging contributors to local employ and to
growth and expansion in general after reading this paper.