FOREIGN DIRECT INVESTMENT IN INDIA: TRENDS AND PROSPECTS

Abstract: Research Aims: The present study aims to examine the pattern of Foreign Direct Investment in India and the impact of various indicators on FDI inflows. Design/methodology/approach: In this study secondary data has been used for a period of ten years from various government institutions. The methods include descriptive statistics as well as Correlation matrix and regression analysis in order to understand the association and impact of FDI with various indicators. Research Findings: With the help of regression analysis, it is proved that various indicators have significant impact on FDI inflows. The correlation matrix and regression explain the association of FDI with different indicators and impact in the previous years with measures which should be taken by the government has been suggested. Theoretical Contribution/Originality: FDI has played a significant role in developing economies like India and has provided a range of theoretical base by focusing on the inflows through productivity, innovation, knowledge transfers, infrastructure development, increasing human capital formation, ease of doing business etc. leading to a sustainable economic growth and emerging markets. This study improves the reliability of existing evidences on FDI with the help of latest data and provides measures for further improvement. Managerial Implication in the South East Asian Context: Through this study the policymakers get an insight about the position of FDI in different areas such as country - wise, sector - wise and state - wise through which new methods and policies for future can be made. The variables in the study would be helpful in understanding that FDI is affected by which of these determinants the most and avoid negative impacts. The major decision regarding development of India from a developing to developed country can be determined. Research limitation &implications: The limitation of this study is that there are only selected variables taken like GDP, FER etc. and more variables can be taken for the study. Keywords: Foreign direct investment, gross domestic product, trade openness, exchange rate, foreign exchange reserves