Indian MNEs & Outward FDI
Partners in Progress: Indian Companies’ Investment Journey in Developing Countries
Setting the Stage: A Tale of South-South Cooperation Picture this: A newly independent India in the 1960s, where a handful of ambitious companies began reaching out to fellow developing nations. Today, that trickle has become a flood – Indian companies have invested over $10.9 billion across 92 developing countries. This isn’t just a story of numbers; it’s a story of how South-South cooperation is reshaping the developing world.
The Three Acts of India’s South-South Investment Drama
Act 1: The Early Partners (1960s-1980s)
- Pioneering companies testing waters in familiar territories
- Birla Group establishing Ethiopia’s first Indian textile factory
- Shriram Group venturing into Sri Lanka with sewing machines
- Strategy: Joint ventures with local partners (100% of investments)
- Like experienced siblings helping younger ones grow
Act 2: The Confidence Builders (1990s)
- Economic reforms spark outward investment
- More companies join the South-South cooperation
- Manufacturing expertise shared with fellow developing nations
- Shift begins from partnerships to independent operations
- Think of it as friends becoming business leaders
Act 3: The Development Champions (2000s onwards)
- Strategic investments in developing region resources and markets
- ONGC exploring oil from Sudan to Russia
- IT companies creating tech hubs in Southeast Asia
- Pharmaceutical firms making medicines accessible
- Like architects helping build new economic structures
The Regional Footprint
The Asian Connection (45.6% of investments)
- Singapore: Southeast Asia’s investment gateway
- UAE: Middle East’s business hub
- Indonesia: The emerging powerhouse
- Success Formula: Cultural synergy + Regional understanding
The African Partnership (30.8%)
- Mauritius: The financial bridge
- Sudan: Energy cooperation
- Kenya: East African anchor
- Strategy: Resource sharing + Market development
The Latin American Bridge (10.8%)
- Brazil: South America’s largest market
- Mexico: Manufacturing cooperation
- Strategy: Technology exchange + Market access
The Transition Economies Link (12.8%)
- Russia: Energy collaboration
- Kazakhstan: Resource partnership
- Strategy: Mutual resource development
The Unique Value Proposition
Technology Transfer Champions
- Software solutions for developing markets
- Affordable pharmaceutical innovations
- Appropriate technology transfer
- Like sharing recipes adapted to local ingredients
Development Partners
- Understanding developing market challenges
- Navigating similar economic environments
- Creating solutions for common problems
- Think of it as neighbors helping neighbors grow
Practical Lessons: Building Together
For Developing Country Companies:
- Start with regional partnerships
- Leverage cultural similarities
- Focus on mutual development
- Share technological knowledge
- Build lasting relationships
For Host Developing Countries:
- Welcome development-friendly investments
- Encourage knowledge transfer
- Create supportive frameworks
- Build long-term partnerships
- Focus on mutual growth
Future Pathways: The South-South Promise
- Technology cooperation deepening
- Resource partnerships strengthening
- Manufacturing collaborations growing
- Development impact increasing
The Development Impact
- Job creation in host countries
- Technology transfer benefits
- Local capacity building
- Infrastructure development
- Market access improvement
The Final Reflection This isn’t just about investments – it’s about how developing countries can help each other grow. Indian companies aren’t just expanding; they’re contributing to a new model of South-South development cooperation. Their journey shows how businesses from developing countries can be effective partners in each other’s development stories.
As Indian companies continue deepening their presence in fellow developing countries, they’re writing a new chapter in South-South cooperation. It’s a story that proves when developing nations work together, they can create sustainable paths to shared prosperity.
Academic 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 1960-80, 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.
Learn More:
Full citation: Pradhan, Jaya Prakash (2008), ‘Rise of Indian Outward FDI: What Implications Does It Hold For Host Developing Countries?’, Revista Economía: Teoría Y Práctica, 29, pp. 9–49, Publisher: Universidad Autónoma Metropolitana-Unidad Iztapalapa.
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