Purpose and orientation

As UNCTAD has observed, a wider audience is now interested in foreign direct investment, but there is not necessarily a good understanding of the concept. I started fdindia.in as an independent, non-commercial initiative, with the encouragement of like-minded colleagues, to create a space for scholars, policymakers, journalists, and students to engage with data, analysis, and perspectives that go beyond the mainstream narrative on FDI.

I have never been opposed to governments, nor have I been uncritically against multinational corporations. My endeavour has always been to advocate a nuanced and evidence-based approach to foreign direct investment, particularly from the perspective of developing countries, an aspect that remains underemphasised in global discussions.

 he purpose of this platform is therefore to contribute, in a modest way, to a more informed and differentiated public and policy debate by examining not only the potential benefits of FDI, but also its limitations, risks, and long-term developmental implications.

My engagement with the Indian corporate sector over more than four and a half decades has gradually convinced me of the need for a specialised forum to explore the less examined dimensions of foreign direct investment. This realisation has emerged from a long association with empirical and policy-oriented research in this field.

I began my academic career in 1980 as a participant in the ICSSR-sponsored research programme Regulatory Administration of the Private Corporate Sector. I later contributed to several major studies, including Corporate Information System (CIS), The Role of Multinational Corporations in India’s Position in the International Division of Labour, and Global Capital Flows and the Indian Stock Market, supported by the Indo-Dutch Programme on Alternatives in Development (IDPAD).

I was also involved in two research projects sponsored by the Union Ministry of Finance — Foreign Investment Approvals: An Analysis(1991–1993) and Foreign Investment Approvals and Implementation Status: A Review (1991–1994) — which gave me the opportunity to examine micro-level developments in India’s FDI landscape.

Throughout these years, my association with the Corporate Studies Group (CSG) was particularly formative, fostering sustained intellectual collaboration across disciplines.

Having begun my career during the regulatory regime and later lived through the liberalisation of the 1990s, the effort to remain analytically grounded and policy-relevant through these changes has been one of the most demanding and instructive aspects of my academic life.

I am therefore guided by the conviction that not all foreign direct investment is created equal, that its benefits are not automatic, and that development outcomes depend critically on the nature of investment, the sectors involved, and the institutional and regulatory context in which it is embedded.

My aim here is not to oppose foreign investment, but to encourage governments and societies — particularly in developing countries — to engage with it more strategically, selectively, and intelligently, so that it contributes meaningfully to long-term development rather than merely to short-term inflows.

Among those who shaped my intellectual development most profoundly was Professor S. K. Goyal — Project Director at CSG and later the founding Director of the Institute for Studies in Industrial Development (ISID). He often reminded us that our central objective was to “raise the level of public debate” through careful empirical work. Another of his exhortations was to “build your colleagues,” which I later adapted as “grow with your colleagues.” In a lighter vein, I often say that he taught me the “ABCs of MNCs.” His leadership gave us both the freedom and the confidence to explore new directions.

I would like to acknowledge in particular Prof. M. R. Murthy, Prof. K. V. K. Ranganathan, Prof. Biswajit Dhar, Prof. Nagesh Kumar, and Shri B. M. Gupta, all colleagues at the Corporate Studies Group. My close association with Prof. Biswajit Dhar in the later part of my career was especially enriching.

I am equally grateful to Prof. Gerd Junne (University of Amsterdam) and the late Prof. Jan ter Wengel (Free University, Amsterdam), whose engagement grew out of my association with the IDPAD-supported studies.

After my retirement, I have had the privilege of continuing my work as a Senior Research Fellow at the Academy of Business Studies under the leadership of Shri Arun Goyal, whose encouragement and institutional support have been central to sustaining my research engagement and to enabling this initiative.

I am also fortunate to have the continued collaboration of Prof. K. V. K. Ranganathan, my long-time colleague since 1980. Our proximity after retirement in Andhra Pradesh has further strengthened our professional association and renewed our collaborative efforts.

K.S. Chalapati Rao

Neither well-monitored FDI in extractive industries nor well structured FDI in manufacturing and assembly offers a panacea for host country development. But when surrounded by an appropriate regulatory and business-friendly setting both offer the possibility of making important contributions ....  This modern day approach differs significantly from the Washington Consensus admonition that FDI was good, and the more the better.                       - Theodore Moran

Give more attention to the thesis that not all incoming FDI is created equal: Any given foreign subsidiary can make invaluable contributions to domestic economic growth ..., and any given subsidiary can be more harmful than beneficial.                Stephen  Cohen,  Multinational Corporations and Foreign Direct Investment: Avoiding Simplicity, Embracing Complexity

The best way of attracting and drawing benefits from FDI is not always passive liberalization (an “open door” policy). Liberalization can help get more FDI, but alone it is not enough. … Getting FDI in technologically advanced or export-oriented activities is even more demanding. … Free markets may not lead foreign investors to transfer enough new technology or to transfer it effectively and at the depth desired by a host country.                                                   UNCTAD, 2003

Benefits from FDI are not automatic. One challenge is that there are different kinds of foreign direct investment, and each may have different economic, social, and environmental impacts. 

Investment policy formulation requires a framework sophisticated enough to differentiate between the various kinds of foreign direct investment, as well as potential challenges and benefits for development.                     --World Bank Policy Research Working Paper, October 2015 

 … countries which manage their FDI are likely to benefit more than those which are managed by their FDI.               Eric Rugraff et. al. (eds.). Transnational Corporations and Development Policy: Critical Perspectives