In recent years, one MNC after another has partially or wholly exited India. This is not wholly a matter for either celebration or mourning. MNCs are exiting for reasons varying from palpable disasters to monetisation of successes.Holcim sold Ambuja and ACC to Adani Group. Vodafone has repeatedly diluted its stake and is now a minority shareholder in Vodafone Idea. Cairn Energy effectively left after its long battle over retrospective taxation. Ford shut domestic manufacturing after accumulating losses exceeding $2 bn. Metro AG sold its wholesale business. General Motors abandoned domestic sales. Harley-Davidson closed manufacturing operations before returning through a partnership with Hero MotoCorp.Disney merged Star India with Reliance after heavy streaming losses. Citibank exited consumer banking while retaining institutional operations. Lafarge disposed of assets following its global merger with Holcim. Whirlpool has steadily reduced its stake in its Indian subsidiary. Even Hyundai, often mistakenly included in the list, has merely monetised part of its holding through an IPO while remaining deeply committed to India.Several of these departures reflected global decisions by foreign parents unrelated to Indian outcomes or policies. Holcim decided to shift globally from cement to higher-value building solutions. Citibank decided to withdraw from retail banking across several countries. Lafarge's divestments were linked to merger requirements. Whirlpool's stake reduction reflected global capital-allocation priorities. Hyundai is plainly not exiting, just monetising a small part of its Indian equity that has become so valuable.Some departures have been cases of straightforward business failure. Ford, GM and Harley-Davidson never truly cracked the Indian market. They underestimated how different Indian consumers are from their counterparts elsewhere. India rewards firms that master localisation, low costs and patient scaling. Global brand strength is no substitute.The saddest cases were Vodafone and Cairn. The Vodafone saga combined a devastating telecom price war with enormous retrospective tax demands. Cairn, too, had to fight large retrospective tax demands for years before selling out to Vedanta.India's 1991 economic reforms sought to attract foreign capital by liberalising markets and integrating with the global economy. That objective remains important. But another goal has increasingly come to the fore: creation of national corporate champions that can stand up to multinational giants. This goal favours industrial policy over competition.India has terminated most of its bilateral investment treaties (BITs) and replaced them with much more restrictive arrangements. It openly emphasises sovereignty over investor rights. India does not want to be humiliated by foreign courts. But this has consequences.Foreign investors do not merely seek growth opportunities. They seek predictability. They want assurance against retrospective taxes and rules. They seek sanctity of contracts and international arbitration. India refuses to provide these.Two, India is candidly willing to tilt the playing field in favour of domestic champions. That is one reason gross FDI has stagnated at around $80 bn a year for 5 yrs.Foreign companies avoid sectors where India's national champions - the big three being Tata, Ambani and Adani - enjoy strong political support. A global resurgence of industrial policy seems to have convinced Indian politicians that they have been on the right track all along. They now seek to create national champions in a wide swath of hi-tech fields.A recent World Bank study on global experience of industrial policy showed that Brazil largely failed while South Korea largely succeeded. Seoul nurtured chaebols, family-controlled conglomerates that received policy support, preferential financing and protection from competition. This helped create champions like Samsung, Hyundai and LG.India seeks to create its own chaebols.However, the Korean originals were overwhelmingly export-oriented, lacking a large domestic market, and had to compete against the world's best to achieve scale and success. International competition imposed brutal discipline. Inefficient companies failed. Successful ones became globally competitive.Brazil's failures flowed from an emphasis on the domestic market. India must beware, for many Indian giants operate in infrastructure, where the domestic market is large and international competition is limited.However, we have successes, too. Reliance's oil refineries are export-oriented, and beat global giants hollow in refining margins. Adani's ports and jetties compete successfully for traffic against jetties run by global giants in India like Maersk and Dubai World. But in many other areas, the risk is that Indian firms may become large without becoming efficient, as in Brazil.Leftist critics claim India is doomed. They also highlight tales of corruption in high places. Remember, many Korean presidents and chaebol chiefs have been convicted of corruption.India seeks simultaneously to attract foreign capital, preserve maximum policy sovereignty and nurture powerful domestic champions. That is a tough act. Some call it muddled thinking. Yet, it could merely be our own version of Korean thinking.Whether India will succeed in creating its own Samsungs and Hyundais is an important, unanswered question. Let nobody jump to conclusions right now. My guess is that India will mostly succeed. But let us also be prepared for some sorry, scandal-ridden failures.(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)