Threat or Opportunity?
Studies in International Investment series
Edited by Karl P. Sauvant
Chapter 3: The Rise of TNCs from Emerging Markets: Challenges Faced by Firms from India
3. The rise of TNCs from emerging markets: challenges faced by ﬁrms from India Ravi Kant INTRODUCTION In the past 50 years, Indian industry has transformed itself from a government-led, license-based and public sector unit-dominated entity into an open, vibrant and globally competitive industry. During these 50 years, Indian companies have overcome many challenges by acquiring unique capabilities. When Indian industry was hit by an economic downturn between 1998 and 2002, with the simultaneous entry of many competitors from abroad and increased customer expectations of quality products and services, many Indian companies enhanced their capabilities to surge above the odds, not only for their own survival but with speciﬁc strategies for sustained growth. Indian companies today are becoming very competitive entities. For example, they are currently the lowest cost telephone and internet service providers in the world, and Indian banks have the lowest cost of technology per transaction, which is nearly one-tenth of their Western counterparts. 3.1 INDIAN TNCS MOVE BEYOND SHORES Indian companies are increasingly competing with major global ﬁrms for businesses and customers. Outbound investment by Indian companies increased continuously between 2003 and 2006 (Figure 3.1). After tripling to $4.5 billion in one year in 2005, it grew by 60 per cent in the ﬁrst nine months of the next ﬁscal year. The average deal size in the 2006 ﬁscal year also tripled over that of the previous year. Indian companies invested over $10 billion overseas in 2006, which is a substantial amount in view of the...
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