TECHNOLOGICAL PERFORMANCE: A COMPARISON OF DOMESTIC AND FOREIGN FIRMS IN INDIAN INDUSTRIES AFTER LIBERALIZATION

This paper analyzes the extent to which the presence of multinational firms helps in technological capability building in Indian manufacturing industries, by comparing the technological performance of around 1800 domestic and foreign-owned firms in various industry groups after the liberalization of the economy in 1991. The technological performance has been captured using four technological indicators, viz., R&D intensity, export intensity, capital goods import intensity, and technology licensing intensity. The results show that there has been a substantial growth in the R&D intensity and export intensity of domestic-owned manufacturing firms in India after the liberalization. However, while the export intensity showed a slight upward trend for the foreign firms, the R&D intensity was more or less stagnant. The study also finds that the dependence on technology imports, either through embodied or disembodied channel, is declining. The results indicate that the technological capability building by both domestic and foreign firms is more industry-specific.