Private foreign capital, whose presence in Indian industry was long regarded with concern and suspicion, is now presented as a panacea for India's poor industrial and export performance. This paper examines available evidence to compare the behaviour and performance of domestic and foreign‐controlled firms in India over the last five decades. It discusses the contribution of foreign capital to aggregate investment, balance of payments and economic growth. We assess the effects of government policy towards foreign investment, review recent changes, and outline implications for the future.
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Athreye et al. (2001) studied this question.
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