Foreign Direct Investment: Growth and role in the Indian Economy

Economics

Foreign Direct investment is a process which enables the residents of one country to directly invest their funds into another country and acquire ownership of assets and exercise control over the investment in terms of production, management, distribution, effective decision making, employment etc. The aim of the present study is to analyse the trend in growth of FDI inflows in India. It is revealed from the results that FDI inflows in India had shown a positive slope with coefficient of about 2.84. In this study the compound growth of FDI inflow in the India is also pointed out since 2000-2001. It is observed from the table that compound growth rate of FDI inflow during the whole reference period was noted to be 25.39 per cent. Further it is revealed that there was a remarkable increase in compound growth rate of FDI inflow during the second phase i.e. from 2005-06 to 2009-10 which was noted to be 51.46%. While as year wise growth rate of FDI inflows is also pointed out in this study. With regard to the year wise growth rate it is revealed from the table that the highest growth rate of FDI inflow was witnessed in the year 2006-07 which is noted to be 129.38 %. Further it is observed from the table that the negative annual growth rate is also witnessed in many years such as 2002-03, 2009-10, 2010-11, 2013-1,. But it is also observed from the table the year wise growth rate of FDI flow is still fluctuating. The study also aimed to understand the importance of FDI for the development of Indian economy.

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