| Type | Journal article (guest editorial) |
| Title | “Foreign Direct Investment and Development in India” |
| Author | Jaya Prakash Pradhan |
| Published | 2011 · Transnational Corporations Review, 3(2), pp. I–VI · Routledge (Taylor & Francis) |
| Read | DOI · PDF |
This is a plain-language summary of “Foreign Direct Investment and Development in India,” a guest editorial I wrote for a 2011 special issue of Transnational Corporations Review. The figures below reflect data available at that time (covering roughly 2000–2010).
In short:
- By the late 2000s India was growing fast — 8.4% a year over 2006–2010, second only to China — and had become the world’s 9th-largest FDI destination.
- The more interesting story is India’s dual role: not just a place to invest in, but increasingly a source of investment, with Indian firms buying assets abroad.
- On two measures that matter, India was actually outpacing China — FDI efficiency and the growth of outward investment.
India’s rise
By the time this editorial was written, India’s transformation was unmistakable. Real GDP grew 8.4% a year between 2006 and 2010 — the second-highest rate in the world after China’s 10.1%. India ranked 9th globally for attracting foreign investment, drawing $34.6 billion in 2009. And the inflows weren’t just large; they were efficient: for every $100 of fixed capital formation in India over 2005–2009, $6.80 came from foreign investment — ahead of China’s $5.90.
India’s dual role
The heart of the editorial is a shift in what “foreign investment and India” even means. For decades the question was how much capital India could attract. By the late 2000s India had become both a leading destination and a rising source — Indian companies were no longer only hosts to global firms but global investors in their own right.
This was part of a wider rebalancing: developing and transition economies were by then receiving more than half of global FDI inflows (2010), and their share of global FDI outflows had climbed from 19% in 2008 to 25% in 2009 — the old assumption that developing countries were only recipients, never sources, no longer held.
India versus China
The comparison with China is revealing. China was bigger on sheer scale — both as a host and as an investor — but on how efficiently India attracted capital and how fast it was investing abroad, India came out ahead:
| Measure | India | China |
|---|---|---|
| Real GDP growth (2006–2010) | 8.4% | 10.1% |
| Inward FDI received (2009) | $34.6 bn | $95 bn |
| Inward FDI intensity — per $100 of investment (2005–2009) | $6.80 | $5.90 |
| Outward FDI (2009) | $15 bn | $48 bn |
| Outward FDI intensity — % of investment (2005–2008) | 3.6% | 1.8% |
| Outward FDI growth (2000–2009) | 119%/yr | 97%/yr |
The pattern is consistent: China led on scale, but India drew foreign capital more intensively relative to its own investment, invested abroad more intensively (nearly double China’s rate), and was expanding its outward investment faster.
Why it matters
India’s experience carried lessons well beyond its borders — about how a major developing economy can integrate into global business as both host and investor:
| For… | The takeaway |
|---|---|
| Global business | India as both a growth market and a low-cost innovation hub; entry modes beyond traditional FDI; a new generation of Indian competitors to watch |
| India | Technology transfer, jobs, and global competitiveness — alongside the policy task of balancing openness with domestic interests and building supportive infrastructure |
| Other emerging economies | A working template for liberalisation and global integration |
The editorial framed the agenda for the special issue around three threads — inward investment (non-equity partnerships, where FDI lands within India, and the challenges of natural-resource projects), outward investment (the rise of Indian multinationals, sector patterns, and how they finance expansion), and the policy questions that run through both (technology transfer, local capability, and the effect on domestic competition). Taken together, they point to a single conclusion: India’s changing place in global business is not just a story of money moving, but of a major economy remaking its role in the world.
Abstract
This editorial introduction provides an overview of the different issues and topics analysed in the present TNCR special issue. It discusses the topics surrounding the rise of India as a host to FDI and as a home for emerging Indian TNCs. The special issue makes a significant contribution to the current debate on the internationalisation of emerging economies like India. Keywords: emerging economies, India, FDI, TNCs. JEL: O50, F23.Cite this article
Pradhan, J. P. (2011). Foreign direct investment and development in India. Transnational Corporations Review, 3(2), I–VI. Routledge (Taylor & Francis). https://doi.org/10.1080/19186444.2011.11658278
