Impact of Sectoral FDI Inflows on Economic Growth of India

Some emerging economies have grown at a higher rate benefiting from Foreign Direct investment (FDI). The purpose of this paper is to analyze the impact of FDI on India's economic growth. FDI is often seen as a major element in the host country s industrial development and growth and its increasing role in international production has raised interest in its effects on the host economies. Besides providing capital inflow, the FDI offers foreign technology managerial skills and improvement in the international competitiveness of domestic firms. A regression analysis is carried out to determine if the foreign ownership has any effect on the productivity. The second aim is to determine and analyze India's policies regarding FDI so that spillover effects might be materialized. However, the main focus is to analyse the sectoral inflows of FDI along with comments on public policies regarding FDI and spillover effects. Several recommendations are suggested to maximise the potential benefits from FDI.