India's Outward Foreign Direct Investment

What is it about?

India has been continually attracting massive foreign direct investment (FDI) since the opening up of its economy with a series of liberalization policies in the early 1990s. This inward FDI plays an important role in the Indian economy as a financier of her balance of payment. However in recent years, India has been fast emerging as an exporter of large volume of FDI. An increasing number of Indian firms are resorting to outward investment in order to access new technologies, skills and managerial expertise etc. from the developed countries. This is a bit of an anomaly. What explains this boom in outward FDI from India? What have been the motivations to invest abroad? What could be its economic implications? These are the questions that generally come into mind. A large number of strategic factors and motivations along with a series of policies liberalization and financial deregulation those are undertaken since the early 1990s are supposed to be the driving forces for this outflow of FDI from India. The present article tries to address some of these issues.

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