Global Players from India: A Political Economy Perspective

Outward foreign direct investment (OFDI) from India has increased rapidly over the past two decades. In international terms, however, it remains negligible. The fact that Indian OFDI accounted for a mere 0.2% of global OFDI stocks at end-2007 (UNCTAD 2007a) only serves to underline this fact. In posing the question of why we should be concerned with Indian OFDI, the answer will not be found in macroeconomic data on trends and patterns in Indian OFDI. Rather, the need to study Indian OFDI arises from its idiosyncratic nature, particularly with regard to the substantial number of acquisitions undertaken by Indian firms in the Triad (United States, Western Europe, Japan-Australia) within the past decade. The need to focus on Indian OFDI from a microeconomic level of analysis becomes somewhat urgent given that Indian firms accounted for 60% of all mergers and acquisitions (M&As) undertaken by firms from Brazil, Russia, India, and China (the BRIC countries) in the Triad between 2000 and 2007 (Bertoni, Elia, and Rabbiosi 2007). Most acquisitions of Indian enterprises have received little media coverage, since most targets have been rather small. However, Tata Motors’ takeover of Jaguar and Land Rover has significantly increased media coverage of Indian multinational enterprises (MNEs). This chapter seeks to complement and build upon macroeconomic analyses of Indian OFDI, which have given us a substantial overview of the trends and patterns of this phenomenon, by providing a microeconomic level of analysis that aims to “disentangle the strategies and characteristics” (2–3) of India’s OFDI. Such an analysis can provide us with a comprehensive analysis of the drivers of and motivations behind Indian investments.