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Huawei is not yet a major player in India’s competitive smartphone market. The company has a low-end brand, called the “Honor” brand in India, and they expect that the Indian smartphone market will use Huawei brand for high-end devices. Both brands had a combined market share of 3.4 percent in 2018. Huawei, by the end of 2018, has chartered out a three-year plan for the Indian market through its dual-brand strategy, backed by investments of over $100 million starting from 2019 with an expansion of local manufacturing activities. Will this global telecom giant become a major player in India? The current chapter explores the issue in light of the Sino-India relationship and the alleged security issues related to Huawei.

While past studies had conflicting conclusions regarding the impact of foreign aid on growth and development of a nation, recent studies have tried to delve deeper into the question, ‘what makes aid work?’ (see, Dutta, Leeson, and Williamson, 2013; Burnside and Dollar, 2000, 2004; Svensson, 1999). This paper tests how political stability (vis-à-vis political instability) affects the relationship between domestic investment and foreign aid. Applying dynamic panel estimators, our results show that political stability affects aid’s effectiveness on domestic capital formation. The paper considers alternative measures of political stability (vis-à-vis instability), focusing on the political characteristics of a system that have the potential to make a nation stable. Political stability affects policy selection by the government positively and, thus, public resources such as foreign aid are put to the desired use. The estimated marginal impacts show that foreign aid enhances domestic investment in the presence of a stable political climate, but there is a diminishing return to aid.

The role of foreign capital inflow, foreign direct investment (FDI) and foreign portfolio investment (FPI), on export behavior of both recipients and non-recipient competing firms in the same sector often guides economic development policy. By using panel data of Indian IT firms over 2000–2006, we show that FDI reduces the sunk costs of entering foreign markets and therefore positively effects both the decision to export and the export propensity of recipient firms. Foreign portfolio investment has no effect on the decision to export, but it does marginally increase the volume of exports. Further, these positive FDI and FPI recipient effects do not spill-over to non-recipients.

The effects of FDI on export behavior of both recipients and non-recipient competing firms in the same sector often guides economic development policy. We estimate a Logit model of the probability of export and Pooled Tobit and Fixed and Random Effects Tobit models of the volume of exports using a large sample of Indian Information Technology firms in 2000-2006 that focus on the role of FDI. For FDI recipients the probability of exporting and the volume of exports is greater. In addition, there is clear evidence of a spillover of the effects of FDI to non-recipient firms as their probability of exporting also increase. In a random effects Tobit model spillover also exists for the volume of exports.