Impact of FDI on Indian Economy - An Analytical Study

The spectacular and unprecedented growth of FDI in the global economic landscape over the last two decades has made it an integral part of the development strategy of both the developed and developing nations. It acts as a major catalyst in the development of a country through up-gradation of technology, managerial skills and capabilities in various sectors. Foreign Direct Investment (FDI) is considered to be the lifeblood of economic development especially for the developing and underdeveloped countries. It plays an important role in the long-term development of a country not only as a source of capital but also for enhancing competitiveness of the domestic economy through transfer of technology, strengthening infrastructure, raising productivity and generating new employment opportunities. Allowing FDI proves good as improvements in supply chain technologies and informational externalities to local players and competitive dynamics that could benefit consumers and suppliers. The present paper is an attempt to study the trends in flow of FDI in Indian Economy. The paper also focuses on the correlation of FDI inflows with various economic indicators.