It's always about technology transfer. India has a huge market, but if you want to sell your products there, you have to create a joint-venture. It started with the pharmaceutical industry many decades ago, that's why India has cheap medicine.
That’s a smart strategy if you do it one product or service at a time. If you block too many new imports at once your economy will implode. If you do it one at a time your economy will manage and you will have a large market for international companies. They will eventually cave in and do business internally with your companies.
The biggest problem is that foreign companies can short-cut the process by bribing officials, but India has still fared reasonably well so far (especially in the defense industry).
China has done this far more aggressively, but had the advantage of the deal struck with Kissinger that gave them all Western technology for free as long as they didn't do business with the Russians.
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