A Study on Impact of Foreign Direct Investment on Gross Domestic Production in India

The review of various literatures and renowned publications is emphasizing that the gross domestic production of a nation is determined by several factors such as growth in agriculture and manufacturing sector, export, inflation, exchange rate and international investment. In spite of different factors affecting the growth, the incremental growth of foreign direct investment in various sectors is considered to be a vital factor which controls all other factor. The 1991 new economic policy has unfolded red carpet to the international investors and reduced the uncertainty on the legal and regulatory frame work boosted the investors’ confidence in the economy. As a result, the Indian economy witnessed a vigorous growth since the implementation of Liberalization, Privatization and Globalization (LPG). In this regard this paper is attempting to investigate the contribution of foreign direct investment to the gross domestic production of India. The investigation was made using a simple regression between foreign direct investment (FDI) and gross domestic production (GDP) for 23 years from 1991 – 2014. The result revealed that FDI has as positive impact on GDP.