ABSTRACT

Foreign investment is a strategic instrument of development policy. It plays an important role in the long-term economic development of a country by augmenting availability of capital, enhancing competitiveness of the domestic economy through transfer of technology, strengthening infrastructure, raising productivity, generating new employment opportunities and boosting exports. In the wake of economic liberalization policy initiated in 1991, the Government of India has undertaken several measures to encourage foreign investment, both direct and portfolio, in almost all sectors of the economy. However, the emphasis has been on the Foreign Direct Investment (FDI) inflows in the development of infrastructure, technological upgradation of industry and setting up of Special Economic Zones (SEZs). With a vast reservoir of skilled and cost-effective manpower, India is now recognized as one of the most attractive investment destinations by reputed international rating organizations. This paper made an analysis to review the trends of foreign direct investments in Indian economy, particularly after a decade of economic reforms and analyze the impact on the economic development of the country. 

Keywords:  Foreign Direct Investment, Economy, Gross Domestic Product, Exports, and Foreign Exchange Reserves.