Institute for Technology & Innovation Management
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India's policies to attract FDI in R&D
A project of:
Project work by: Alexandros Chatzidelis
Project supervision: Rajnish Tiwari
Start: April 2007
Proposed duration: Six months
Project Status: Project completed [Download project report, PDF, 374 KB]
For the last 30 years the world has experienced a steady increase in foreign direct investment (FDI) cashflows . According to UNCTAD, an intergovernmental forum for the integration of developing countries in the world economy, FDI inflows are the biggest component of net inflows to developing countries. Thus, FDI acts as a major driver for their development. Breaking these inflows down to their components according to economic activity, the service sector occupies the biggest share .
In India, which stands in the focus of this study, FDI in the service sector does not only aim at "business process outsourcing" (BPO), such as call centers or telemarketing, but also at much more sophisticated activities such as research and development (R&D) (in combination with other high-end services generally known as "knowledge process outsourcing" or KPO) . Actually, such is the importance of India in this field that the leading business magazine The Economist claims that no big international company can do without an India strategy today . Companies like General Electric, BASF, Microsoft, Oracle, SAP and IBM – to name but a few – are all pursuing R&D in India, which simply confirms the above statement .
In an ever more globalizing and, thus, ever more competitive world, the effort to attract FDI in general, and in R&D in particular, cannot be left to chance. The objectives of the present study are to identify India’s policies and practices in order to attract FDI in the field of R&D. More specific, this study aims to identify :
This study is a part of the project India's Innovation System: Exploring the Strengths, currently being carried out at TIM/TUHH within the framework of Research Project Global Innovation. A major objective of this research is to identify policies employed by the Indian governemnt to deal with FDI issues in the R&D sector. It would also seek to make policy recommendation to overcome any shortcomings identified during the study. Another major advantage of this study would be that it could serve as a benchmark for other countries.
In order to collect the necessary information to meet the objectives, it is proposed to split the research process into two sections:
The results of the above research will be used to meet the targets mentioned in the section Objectives and help to better understand India’s innovation system.
[ For further enquiries, please contact Rajnish Tiwari ]