Filling a colonial void? German business strategies and development assistance in India, 1947–1974

Abstract

Decolonisation after World War II posed a threat to foreign businesses, when newly independent governments sought more national control over the economy. This article analyses cases of German multinational enterprises (MNE) in India. Focusing on companies from different sectors it analyses how these MNEs dealt with risks associated with tighter regulation of the economy and economic nationalism. German corporate nationality quickly became an asset that was used to position subsidiaries in India against foreign competitors. In the following years ‘Indianisation’ strategies for management and networks of German and Indian employees added security to long-term business interests. Carefully created Indo-German nationality of the companies reduced liabilities of foreignness. Furthermore, aligning with West German development assistance helped to strengthen the position of German private companies. These findings support the existing argument for a multi-faceted view on liabilities of foreignness and their quickly changing nature.

Keywords:

• German multinational enterprise
• India
• liability of foreignness
• development assistance
• post-colonial

Acknowledgments

The author would like to thank the anonymous reviewers and the co-editor of this special issue, Alfred Reckendrees, for their suggestions and criticism on earlier versions of this article. The author, however, takes full responsibility for the content of this final version of the article.

Disclosure statement

No potential conflict of interest was reported by the authors.

Archives

Bayer AG Corporate Archives, Leverkusen (BAL)

Robert Bosch GmbH Corporate Archives, Stuttgart (RB)

Volkswagen AG Corporate Archives, Wolfsburg (UVW)

Federal Archives of Germany, Koblenz (BArch)

National Archives of India, New Delhi (NAI)

Political Archive of the Federal Foreign Office of Germany, Berlin (PA AA)

Notes

1 Unless indicated otherwise, the terms “German” or “Germany” in this article refer to the Federal Republic of Germany.

2 On Germany’s largest chemical corporation up to 1945, the Interessengemeinschaft Farben (I.G.) see (Plumpe, 1990; Stokes, 1988).

3 In the 1960s, the so-called “Bundesstelle für Außenhandelsinformation”, a government-sponsored agency for the information of German business on tenders and export possibilities abroad, was among those that published information on Indian market conditions with the encouragement to invest, see (Witzel, 1960).

4 To further support Indo-German joint ventures, the Ministry for Economic Cooperation (BMZ), regarded the so-called commodity aid to finance imports of raw materials and machines for production processes as a regular instrument for the 1970s to support German businesses in India (BMZ, 1971). In this way, German companies, among them Bayer and Bosch, received smaller loans of up to DM 3 million on attractive terms during the first half of the 1970s. This kind of aid was less visible than large developmental projects of the 1950s and 1960s like the Rourkela steelworks; however, it proved to be an important part of development aid that private business benefited from (Kreditanstalt für Wiederaufbau, 1974).

Additional information

Notes on contributors

Julian Faust

Julian Faust worked as a research assistant and Ph.D. scholar at the Institute for Economic and Social History, University of Marburg, Germany in a project on German business in India in post-Independence India funded by the German Research Foundation (DFG) from 2017 to2020. He holds a B.A. in Philosophy & Economics and an M.A. in Economic & Social History.