Foreign direct investment from India is not a marginal phenomenon. It is quite sizeable relative to foreign direct investment into India and private corporate investment in India. It is also quite comparable with the magnitudes of foreign direct investment of the newly industrialising countries and some small developed capitalist countries. Foreign direct investment from India has grown steadily since the mid-sixties. However, there has been a distinct slackening of the rate of growth since 1979-81. The author is of the view that transnationalisation of the Indian private corporate sector is not too insubstantial. The Indian capitalist class has 'come of age' and is undertaking industrial ventures abroad in its drive towards capital accumulation.
This paper is an empirical study of the phenomenon of foreign direct investment (FDI) from India, its evolution over time, and across industries. It is an attempt is to arrive at estimates pertaining to FDI on account of all business activities incorporated abroad, except banking and insurance Branch operations, whatever be the nature of activity, are entirely excluded because almost no data on branch operations is available. Section I, covers the antecedents of FDI from India, and is based entirely on secondary sources. Section II, introduces the phenomenon while Section III, based entirely on data published by the Reserve Bank of India (RBI), gives a rough estimate of the magnitude of the phenomenon prior to 1961. Sections IV and V deal with the period after 1964, which is the locus of this study. The years 1962 and 1963 had to be excluded because there is no data whatsoever for these years. Section IV includes a discussion on the sources of data and their limitations, and the method of aggregation used to arrive at the time patterns and other aspects of FDI from India on account of the official category of firms abroad, the 'Joint Ventures' (JVs). It is based largely on information collated from government files pertaining to individual JV.s Section V covers other firms abroad, particularly the official category, 'subsidiaries' for which there is no published data. As regards JVs, while published data exists, it is inadequate and can be quite misleading Hence both sections IV and V—being based on unpublished information, include a rather long discussion on the limitations of the data.