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Outward foreign direct investment (OFDI) by Indian firms has increased significantly in recent years. Such investments by Indian firms have gone to more than 100 host countries. However, little is known about the effects of such OFDI on domestic activity of Indian multinational enterprises (MNEs). The paper investigates the home-country effects of OFDI by Indian manufacturing firms during 2008/09 to 2011/12 using a quasi-experimental technique. A priori, the relationship between firm’s OFDI and domestic activity is ambiguous as both complementary and substitution effects could be induced by such investment activities.

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