Economic and Policy Determinants of Foreign Direct Investment: An Empirical Analysis in Context of India.

India is identified as one of the most attractive long-term investment destinations. The presence of large domestic market, fairly well developed financial architecture and skilled human resources, it can attract much larger foreign investments than it has done in the past. India’s present international investment regime facilitates easy entry of foreign capital in almost all areas subject to specific limits on foreign ownership. Entry options have not only become procedurally simpler, but prospects for higher yields from investment have also become brighter. But further boost to Foreign Direct Investment (FDI) will depend significantly on further liberalization of its foreign investment regime. The paper provides the brief synthesis of the regime and analyzes the economic and policy variables as the important determinants of FDI inflows to India. It also emphasizes the areas where the policy needs to be reviewed and to be made more conducive for foreign investment. Read More