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India as a Source of Outward Foreign Direct Investment

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  • Rabin Hattari
  • Ramkishen Rajan

Abstract

While India is an increasingly attractive destination for foreign capital, the country is also becoming a significant source of outflows. Many Indian enterprises view outward foreign direct investment (OFDI) as an important dimension of their corporate strategies. This paper presents some data on the magnitude and composition of Indian OFDI. It also discusses the rationale for and empirical determinants of overseas acquisitions by Indian companies. The empirical findings suggest that OFDI from India is not entirely different from that of other countries in that they are motivated by many common factors. There is evidence, however, that Indian OFDI is more market- and resource-seeking than OFDI from most other countries. The paper concludes with a broader discussion of the impact of the global rise of Indian companies on the Indian economy.

Suggested Citation

  • Rabin Hattari & Ramkishen Rajan, 2010. "India as a Source of Outward Foreign Direct Investment," Oxford Development Studies, Taylor & Francis Journals, vol. 38(4), pages 497-518.
    • Handle: RePEc:taf:oxdevs:v:38:y:2010:i:4:p:497-518
    DOI: 10.1080/13600818.2010.524695
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    1. Priyesh Valiya Purayil & Jijo Lukose P. J., 2022. "Does cross‐border acquisition reduce earnings management of emerging market acquirers? Evidence from India," International Review of Finance, International Review of Finance Ltd., vol. 22(1), pages 143-168, March.
    2. Stoian, Carmen, 2013. "Extending Dunning's Investment Development Path: The role of home country institutional determinants in explaining outward foreign direct investment," International Business Review, Elsevier, vol. 22(3), pages 615-637.
    3. Rao-Nicholson, Rekha & Ayton, Julie (Salaber), 2016. "Euphoria in financial markets: How Indian companies generate value in their cross-border acquisitions," Research in International Business and Finance, Elsevier, vol. 38(C), pages 494-508.
    4. Dikshita Kakoti, 2019. "An Empirical Investigation of India’s Outward Foreign Direct Investment: A Macro Perspective," Emerging Economy Studies, International Management Institute, vol. 5(2), pages 79-88, November.
    5. Khanindra Ch. Das, 2013. "Home Country Determinants of Outward FDI from Developing Countries," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 7(1), pages 93-116, February.
    6. Andaman, Gul & Yusop, Zulkornain & Mohd Noor, Zaleha & Kaliappan, Shivee, 2016. "Host Country-Specific Factors Causing Outwards Foreign Direct Investment from Malaysia," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 50(1), pages 67-80.
    7. Munmi Saikia, 2020. "Location Determinants of Indian Multinationals: A Multilevel Analysis," Global Business Review, International Management Institute, vol. 21(5), pages 1200-1217, October.
    8. Edacherian, Saneesh & Panicker, Vidya Sukumara, 2022. "Do interlocks by different types of directors affect the nature of internationalization strategy of emerging market multinationals?," International Business Review, Elsevier, vol. 31(4).
    9. Wladimir Andreff, 2015. "Outward Foreign Direct Investment from BRIC countries: Comparing strategies of Brazilian, Russian, Indian and Chinese multinational companies," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 12(2), pages 79-131, December.
    10. Swati Virmani & Edmund Amann, 2015. "Is the evolution of India’s Outward FDI consistent with Dunning’s Investment Development Path sequence?," Working Papers 92160912, Lancaster University Management School, Economics Department.
    11. Dr. Nihal Bayraktar, 2015. "Importance of Investment Climates for Inflows of Foreign Direct Investment in Developing Countries," Business and Economic Research, Macrothink Institute, vol. 5(1), pages 24-50, June.
    12. Wladimir Andreff, 2014. "Outward foreign direct investment by Brazilian and Indian multinational companies: comparison with Russian-Chinese multinationals," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01279896, HAL.
    13. R. Malar MOZHI, & Alexandru Mircea Nedelea, 2017. "Internationalization of emerging markets multinationals: Strategies," EcoForum, "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration - Economy, Business Administration and Tourism Department., vol. 6(3), pages 1-13, august.
    14. Wladimir Andreff, 2014. "Outward foreign direct investment by Brazilian and Indian multinational companies: comparison with Russian-Chinese multinationals," Post-Print halshs-01279896, HAL.
    15. Tom Barnes, 2017. "Industry policy in Asia’s demographic giants: China, India and Indonesia compared," The Economic and Labour Relations Review, , vol. 28(2), pages 218-233, June.
    16. Xie, En & Reddy, K.S. & Liang, Jie, 2017. "Country-specific determinants of cross-border mergers and acquisitions: A comprehensive review and future research directions," Journal of World Business, Elsevier, vol. 52(2), pages 127-183.
    17. Reddy, Kotapati Srinivasa, 2015. "Macroeconomic Change, and Cross-border Mergers and Acquisitions: The Indian Experience, 1991-2010," MPRA Paper 63562, University Library of Munich, Germany, revised 2015.
    18. Nihal Bayraktar, 2013. "Foreign Direct investment and Investment Climate," EcoMod2013 5294, EcoMod.
    19. Oludotun Fasanya, David & Ingham, Hilary & Read, Robert, 2022. "Determinants of internationalisation by firms from Sub-Saharan Africa," Journal of Business Research, Elsevier, vol. 144(C), pages 951-965.

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