| Type | Working paper |
| Title | “Building Indian Multinationals: Can India ‘Pick Up the Winners’?” |
| Author | Jaya Prakash Pradhan |
| Published | 2003 · MPRA Paper No. 12403 · University Library of Munich, Germany |
| Focus | India’s industrial policy vs the “picking the winners” strategies that built champions elsewhere |
| Read | Working paper (PDF) |
This is a plain-language summary of “Building Indian Multinationals: Can India ‘Pick Up the Winners’?” (Pradhan, MPRA Paper No. 12403, 2003).
In short:
- Many countries built world-class companies through deliberate “picking the winners” (PUW) industrial policy — choosing strategic sectors and firms and backing them. The paper compares India’s approach to theirs.
- Its core finding: India’s industrial policy — even after liberalisation — lacks the sectoral and firm-level targeting that was crucial to other countries’ global champions.
- The argument is that if India wants its own multinationals, it must rethink its industrial strategy rather than rely on a hands-off, market-led path.
The big question
How do countries grow companies capable of competing at the global top table? This 2003 working paper by Jaya Prakash Pradhan tackles that by tracing the evolution of Indian industrial policy and setting it against the “picking the winners” approach that many industrialised and industrialising countries used. The framing question — can India build its own global champions? — is a policy one, and the paper’s answer is a qualified challenge to the prevailing market-led consensus of the time.
How other countries built champions
The paper’s comparative core is an account of how four very different economies used active, targeted policy to create global firms.
The pattern across them is consistent even where the methods differ. The United States protected infant industries behind tariffs and let military R&D spending drive innovation in electronics, aerospace and communications — embracing free trade only after its firms were globally competitive. Japan gave targeted support to chosen sectors, shielded its home market while pushing exports, and emphasised absorbing foreign technology. South Korea built large business groups (chaebol), tied government support to performance, insisted on exports from the outset, and regulated to keep firms competitive. China assembled a “national team” of roughly 120 large enterprise groups with heavy state financial backing and required technology transfer from foreign entrants. The common thread the paper draws out is selectivity: each government picked sectors and often firms, and backed them deliberately.
India’s different path
Against that backdrop, the paper sets India’s three-phase policy history — and identifies what’s missing.
In the protection era (1950s–1980s), India pursued import substitution, restricted firm growth, and limited access to foreign technology — producing, in the paper’s assessment, high-cost and often inefficient industries. The transition (1980s–1991) eased licensing and promoted exports but remained heavily regulated. And the market era (1991 onwards) dismantled the licensing system, opened the economy to foreign investment, and promoted exports. But here is the paper’s central point: even this liberalised regime lacked a strategic focus on building champions — it opened the economy without ever adopting the sectoral and firm-level targeting that, in the paper’s reading, was crucial elsewhere. India swapped heavy control for openness, but never picked up the “picking the winners” toolkit in between.
What the paper says India would need
Having diagnosed the gap, the paper sketches what a more deliberate strategy might involve — and it’s worth reading these as the author’s 2003 proposals, with their examples rooted in that moment. It points to strategic selection (identifying potential champions in key sectors, naming as illustrative candidates firms such as Ranbaxy, Dr Reddy’s and Cipla in pharma; Wipro, Infosys and TCS in IT; and Tata Motors and Mahindra in autos); targeted support (R&D funding, export assistance, technology-acquisition help, performance-based incentives); and protection of strategic firms from hostile takeovers (citing, as a then-current example, the attempted takeover of Asian Paints by ICI, and pointing to US and French legal models). These specific firms and episodes are the paper’s contemporary illustrations rather than fixed prescriptions — several of the named firms did go on to become significant multinationals — but the underlying argument is the durable part: building champions takes deliberate strategy and sustained support.
Why it matters
The paper’s lasting contribution is to pose a sharp choice that remained live well beyond 2003: should India continue with a largely hands-off, market-led approach, or adopt a more strategic, targeted industrial policy aimed explicitly at building world-class firms? Its own answer leans toward the latter — without targeted intervention, it argues, creating global Indian multinationals would remain difficult. Reasonable economists disagree about industrial policy, and a reader can weigh the PUW model against the risks of governments picking badly; but as an early, clearly-argued statement of the “India needs strategy, not just openness” position, the paper is a useful entry point into a debate that India is, in various forms, still having.
Read the academic abstract
This paper traces the evolution of Indian industrial policy and compares it with the “picking up the winners” (PUW) industrial policy adopted by many industrialised and industrialising countries. The study finds that Indian industrial policy still lacks the sectoral and firm-level targeting that was crucial to the emergence of other countries’ enterprises as leading global players. India must rethink its industrial strategy if it wants to build its own multinationals.Cite this working paper
Pradhan, J. P. (2003). Building Indian multinationals: Can India ‘pick up the winners’? (MPRA Paper No. 12403). Munich: University Library of Munich.
Read the working paper (PDF) →
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