Embracing FDI Flows: Crafting Strategies for India's Economic Growth
Kondoju Vajrank Vishwaroopa Chary
Master of Science, Department of Economics Central University Of Andhra Pradesh, India
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http://doi.org/10.37648/ijps.v21i03.013
Abstract
This research analyses the dynamics of foreign direct investment and its contribution to the economic growth of India. Using a multiple linear regression model with backward elimination technique, the study analyses sectorial FDI data from 2000 to 2024. Results show that technology-driven sectors, mainly Computer Software & Hardware (? = 0.478, p = 0.001), Automobile (? = 0.389, p = 0.021), and Power (? = 0.374, p = 0.025), contribute significantly to India’s economic growth peroxide as gross domestic product (GDP). Meanwhile, Telecommunications (? = ?0.222, p = 0.030) and Construction (Infrastructure) (? = ?0.452, p = 0.006) show negative correlations, probably due to regulatory hurdles or diminishing returns. Despite receiving the highest FDI ($119,093.37 million), the services sector shows meagre or no significant impact on GDP (p = 0.516), possibly due to profit repatriation to the home country or domestic competition. The econometric model (adjusted R² = 0.933–0.936) underscores the need for sector-specific FDI policies to maximize economic benefits. This research provides statistical evidence and recommendations for aligning FDI policies with India’s development goals of becoming a developed country by 2047; targeted interventions are needed to enhance GDP growth and achieve competitiveness at the global level.
Keywords:
Foreign Direct Investment; Sectorial Analysis; Economic Growth; Multiple Linear Regression; GDP Impact
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