CAUSAL RELATIONSHIPS BETWEEN FDI AND ECONOMIC GROWTH IN INDIAN INDUSTRIAL SECTORS: A SEM APPROACH

Purpose: This empirical investigation comes from the inconclusive evidence produced by a flurry of previous empirical studies on foreign direct investment (FDI)-growth nexus. The study recognizes the fact that the treatment of FDI inflows in an aggregate form instead of a Select sector for correlating it with economic growth in India. Design/Methodology/Approach: The purpose of the study is based on Top Five Sectors (Service sector, Telecommunication Sector, Drugs and Pharmaceutical sector, Chemical Sector, Metallurgical industries) in India. I collected data from the DPIIT website (Secondary Data) for the period 2022-2023. We are Using stalactitical tools like ADF Stationarity, VECM, VAR, SEM Model. Originality/Value: This study applies Structure Equation model with vector autoregressive specification to examine as to how sector-wise FDI inflows can affect the growth of respective sectors in the context of an emerging economy like India for the period from April 2022 to March 2023. Findings: FDI and growth both for the short and long run. On the basis of the findings, the study suggests economic policymakers to rejuvenate the primary sector of India so that it can attract and absorb more FDI and ensure sustainable Sectoral growth. The study examined that Computer Software & Hardware, Service Sector, Trading Sector, Non-Conventional Energy, Drugs & Pharmaceuticals with FDI had shown significant short run relationship Keywords: FDI, Sectoral Growth, Economy Growth, SEM Model.