Corruption's Effect on Swedish Companies' FDI in India - A study of how Swedsih companies perceive and handle corruption on the Indian market

Abstract

This study focuses on the effect of corruption on Swedish Foreign Direct Investment (FDI) in India. In the last years, India‟s economy has been booming; the country is in a phase where it has great opportunities to develop and enforce its‟ economy, and therewith change the faith of millions of people who are still suffering of poverty. As a way to develop a nation, FDI can be seen as a long term commitment from a country to another that drives a long-term change. But companies establishing businesses in India are facing bureaucracy, slow infrastructure developments and high levels of corruption. This report focuses on the latter, and is based on the research questions: is corruption an entry barrier for Swedish enterprises? How are Swedish companies handling the high levels of corruption on the Indian market? Is corruption on the Indian market hindering FDI from Swedish companies? The study has been performed using a qualitative method with an exploratory approach to address the complexity of the problems. Personal interviews have been conducted and supplemented by secondary data. The findings are not pointing at any particular effect of corruption on Swedish companies‟ establishment in India: it is not perceived as a major hinder. Furthermore, findings of this report indicate low levels of anti-corruption programs and a lacking knowledge of the OECD convention, although Swedish companies are handling the high levels of corruption in other ways, and that production companies in general are face a higher risk of corruption. The conclusions of this report further confirm previous research; bureaucracy is the major obstacle on the Indian market. It was also found that it is possible that corruption on political level in India affects Swedish FDI since it can preserve the high level of bureaucracy.