Impact of Foreign Direct Investment on Economic Growth and Development in India: An Analysis of Policy, Industry, and Technological Spillover Effects

  • Unique Paper ID: 174169
  • Volume: 11
  • Issue: 10
  • PageNo: 2747-2756
  • Abstract:
  • The infusion of Foreign Direct Investment (FDI) into the Indian economy has been a significant driving force behind its remarkable growth trajectory. FDI attracting capital, technology and foreign investors, fostering a growth oriented economic expansion. This capital inflow enhances the country’s infrastructure, industrial capabilities, and service sectors, thereby creating a ripple effect of development. Moreover, FDI contributes to employment generation, skill development, and the establishment of new industries, further bolstering economic growth. India's liberalized FDI policies have attracted substantial investments across various sectors such as manufacturing, telecommunications, retail, and financial services. This influx of foreign capital has not only augmented domestic investment but also facilitated access to global markets, thereby enhancing the competitiveness of Indian industries. The spillover effects of FDI include the introduction of modern technologies and management practices, which contribute to productivity improvements and innovation within the domestic economy. The favourable influence of FDI on India's economic development is evident in the increased GDP, improved living standards, and the creation of a robust business ecosystem. However, it is essential to address potential challenges such as regulatory hurdles, infrastructure bottlenecks, and ensuring that the value of FDI are fairly allocated throughout areas and sectors. In conclusion, FDI performs a crucial part in transforming India's economic climate, driving sustainable growth, and positioning the country as a global economic powerhouse. Secondary data from 2000 to 2017 has been used, collected from sources like journals, books, and RBI reports. A key contribution of this paper is examining the nature and impact of FDI.

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