A Study of Various Factors Affecting Inflows of Foreign Direct Investment in India

Foreign direct investment is a critical driver of economic growth for any developing nation. For India, it is a major source of non-debt financial resource for the economic development. As a result of major global acquisitions by Indian companies, India is the fifth largest source of funds (FDI outflow) in developing Asia. FDI to India doubled to US$ 4.48 billion in January 2015, the highest inflow in last 29 months, from US$ 2.18 billion in January 2014. The continuous inflow of FDI in India, which is now allowed across several industries, clearly shows the faith that overseas investors have in the country's economy. The current paper shows the flow of FDI from different countries and their sectoral distribution. Further it describes the factors (GDP, Foreign trade, foreign exchange rate and foreign exchange reserve) affecting the inflows of FDI in the country. The regression model of FDI has also been developed in the study.