A Study on Foreign Direct Investment Impact on the Indian Economy

( Vol-11,Issue-4,July - August 2025 )

Author(s): Umamaheswararao Gobbilla, Bandam Mallikharjun

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Page No: 178-195
DOI: 10.22161/ijaems.114.20

Keywords:

Foreign Direct Investment (FDI), Indian Economy, Economic Growth, Capital Inflow, Investment Policy, Sectorial Investment, GDP Growth, FDI Trends in India.

Abstract:

This study investigates the impact of Foreign Direct Investment (FDI) on India’s economic growth from 2017 to 2024, utilizing secondary data analysis and regression techniques. The methodology involves analysing sectorial FDI inflows, their contribution to gross domestic product, and correlations with macroeconomic indicators such as inflation and stock market performance. Findings reveal that while FDI inflows have fluctuated, peaking during 2020-21, their direct influence on GDP, inflation, and stock indices remains statistically insignificant. The research highlights that FDI primarily benefits manufacturing and technology sectors, with limited immediate macroeconomic effects. These results imply that FDI alone cannot drive rapid economic changes but plays a vital role in sectorial development and long-term growth. The study underscores the importance of comprehensive policy measures to optimize FDI’s contribution to sustainable economic progress.

Received: 20 Jun 2025; Received in revised form: 09 Jul 2025; Accepted: 14 Jul 2025; Available online: 16 Jul 2025

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