FDI and firm level export competitiveness in the Indian machinery industry

The paper examines the effect of FDI on firm-level export competitiveness by comparing the export behaviour of foreign controlled and domestic firms in Indian machinery industry. It defines the firm-level export competitiveness involving two aspects of export behaviour: i) the export itself or a firm’s decision to export and ii) the exporting firm’s decision on the portion of output to export (export intensity). Findings of the study reveals that the foreign controlled firms have greater likelihood of exporting, even after controlling for the large number of additional factors influencing export activity. However,the export intensity of exporting firms is not affected by FDI but affected favourably by a host of other firm-specific factors such as arms length import of disembodied technology, import of raw material and capital goods, use of labour intensive technology, larger size and years of experience.