A CRITICAL STUDY ON THE ROLE OF FOREIGN DIRECT INVESTMENT IN INDIA

Foreign direct investment (FDI) as a strategic component of investment is needed by India for achieving the economic reforms and maintains the pace of growth and development of the economy. FDI is a tool for economic growth through its strengthening of domestic capital, productivity and employment. FDI also plays a vital role in the up gradation of technology, skills and managerial capabilities in various sectors of the economy. The paces of FDI inflows in India initially were low due to regulatory policy framework but there is a sharp rise in investment flows from 2005 towards because of the new policy has broadened. The present descriptive and purely secondary based study has been undertaken with the objective to understand the role of FDI in India and effect of foreign inflows in economic growth of India. India is among the third most attractive destination by foreign companies and FDI brings a positive impact on country’s GDP, foreign trade, employments are some of the major findings of the study. The paper concludes that the increased inflow of FDI in a country has given a major boost to the country’s economy.