Journal of Business & Economic Policy

Indian Multinational Corporations and Technology Transfer: Prospects and Determinants
Dr. P Abdul Kareem

Abstract
In the ongoing process of opening up of the Indian economy, opening up of foreign direct investment sector is important. India witnessed huge inward and outward flows of foreign direct investment after early 1990’s. The multinational corporations carry foreign direct investment. The foreign multinational corporations contributed to the development of Indian domestic industrial economy in a significant way. Here, over the period of time the multinational corporations of Indian orgin also emerged. In this context, this study analyses the extent and determinants of technology transfer by Indian multinational corporations. The two multinational corporations such as Reliance Industries and Tata Motors are selected for detailed analysis. Firstly the study analyses the changing structure of embodied technology in terms of intangible assets of these corporations over the period 2003-2017.The intangible assets in terms of product development cost has emerged both in Reliance Industries and Tata Motors. The assets in computer software also significantly increased in both these corporations. The various determinants of technology transfer are outward foreign direct investment, trade openness and Research & Development expenditure by Government. The Johansen and Juselius Co-integration Test and Fully Modified Least Square (FMOLS) methods are applied to estimate the determinants. The study reveals that the Government expenditure on R& D very significantly result in the technology transfer by both multinationals. Next, the degree of trade openness significantly lead to technology transfer by both the multinationals. Then, the quantity of outward foreign direct investment also leads to technology transfer. This is so with both Reliance industries and Tata Motors. From this analysis we may draw the inference that higher openness in terms of trade openness and higher outward foreign direct investment followed by large Government expenditure on research and development provide huge prospects for Indian multinational corporations in the global economy.

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