| Type | Journal article (empirical study) |
| Title | “Evolution and Pattern of Indian Outward FDI in ASEAN Region” |
| Authors | Jaya Prakash Pradhan · Tareef Husain · Ravinder |
| Published | 2020 · FOCUS: Journal of International Business, 7(2), pp. 135–160 · Journal Press India |
| Read | DOI: 10.17492/jpi.focus.v7i2.722007 |
This is a plain-language summary of “Evolution and Pattern of Indian Outward FDI in ASEAN Region,” a paper I co-authored with Tareef Husain and Ravinder (FOCUS: Journal of International Business, 2020).
In short:
- Over five decades, Indian investment in Southeast Asia grew from a trickle to a flood — from $38 million in the 1980s to over $49 billion by 2014, and from 47 firms to 1,819.
- Yet it became more concentrated, not less: Singapore’s share rose from 61.6% to 93.7%, drawing in nearly every Indian investor heading east.
- A handful of large firms dominate — the top five account for 45.8% of all investment — while SME participation remains thin.
From first steps to confident strides
The relationship began modestly. The first venture came from Godrej & Boyce, which set up in Malaysia in 1965, and the early pioneers chose partnership over going it alone, working through joint ventures with local companies. From there, the story moves through three distinct eras:
| Era | Indian investment in ASEAN | Firms | Singapore’s share |
|---|---|---|---|
| 1980s | $38 million | 47 | 61.6% |
| 1990s | a dip — focus shifted to developed markets* | — | — |
| 2000–2014 | over $49 billion | 1,819 | 93.7% |
* During the 1990s, ASEAN’s share of India’s total overseas investment fell from 29% to 7.3%, as liberalisation freed Indian firms to look toward developed markets.
The Singapore story
The most striking pattern is geographic. As Indian investment in ASEAN exploded, it didn’t spread across the region — it funnelled into Singapore, which went from hosting most Indian investment to hosting almost all of it.
Why Singapore? The pull was a combination of a large Indian diaspora (around 3.5 lakh) and the familiarity of Tamil as one of its official languages; concrete business advantages in tax and connectivity; and its position as a gateway to the wider ASEAN market. For an Indian firm heading east, Singapore was the natural first — and often only — stop.
Who’s investing
The flow is top-heavy. The five largest investors alone account for 45.8% of all Indian investment in ASEAN — Bharti Airtel, Tata Steel, Tata Motors, VSNL, and Reliance Communications — a concentration of big-corporate names that mirrors the geographic concentration in Singapore.
Smaller firms are present but few. Just 46 Indian SMEs had invested in ASEAN, most of them (58.7%) in manufacturing, and — unlike the early pioneers — they tended to prefer full ownership over joint ventures, with Frost International Ltd. among the most active. The sectoral picture overall leans on services (transport, storage and communication; finance, insurance, real estate and business services) and, in manufacturing, on transport and motor-vehicle equipment — with firms motivated mainly by market access and by seeking assets and resources.
Opportunities and challenges
| Opportunities | Challenges |
|---|---|
| A growing ASEAN consumer market | Over-concentration in Singapore |
| Cultural and geographical proximity | Limited SME participation |
| Complementary economic strengths | Need for a broader regional spread |
| Strong policy support (free-trade agreements) | Competition from other global players |
Why it matters
The arc of this story is the arc of Indian business itself — from hesitant first ventures to confident global investment, and from simple trade to complex cross-border investment patterns. But the concentration is the cautionary note. A relationship that runs almost entirely through one city, and is carried by a handful of large firms, has room to deepen: the next phase of India–ASEAN business depends on spreading beyond Singapore to the wider region, and on bringing many more small and medium firms along.
Read the academic abstract
This study focuses on the evolution of Indian outward foreign direct investment (OFDI) flows into the Association of South-East Asian Nations (ASEAN) region since 1980. It describes the changing nature of ASEAN-focused Indian OFDI and infers the causes behind those changes over different periods. It highlights the sectoral composition, ownership structure, firm size, and acquisitions that most visibly characterise the patterns of investment undertaken by Indian firms in the ASEAN region, and briefly discusses the development impact of Indian FDI in ASEAN. Indian OFDI in the ASEAN region is found to be concentrated in Singapore, followed by Malaysia and others. The major sectors of investment include services — transport, storage and communication; financial, insurance, real estate and business services — while in manufacturing, most investment is in transport and motor-vehicle equipment. The main motivations of Indian firms appear to be improving market strength or seeking assets, business strategies, and resources in ASEAN countries.Cite this article
Pradhan, J. P., Husain, T., & Ravinder. (2020). Evolution and pattern of Indian outward FDI in ASEAN region. FOCUS: Journal of International Business, 7(2), 135–160. Journal Press India. https://doi.org/10.17492/jpi.focus.v7i2.722007
Related on this site
- The co-author’s profile: Dr. Tareef Husain — Charting New Paths in Regional Economics
