Abstract
Foreign Direct Investment (FDI) has emerged as an important topic for researchers and policymakers in India. The present study analyze the dimensions, i.e., current status, global position, trends, growth, sources, sectoral composition, regional distribution, and the determinants of FDI inflow in India after the economic reforms in the year 1991. Furthermore, this piece of research answers an important question, i.e., whether the currency area hypothesis of Aliber (1970) is good enough to explain FDI inflow in India during 1991 – 2018? The study uses trend analysis and simple linear regression analysis to analyze the data. The findings of this research have shed light on some of the important aspects of FDI inflow in India. The inward FDI in India has increased from the US $75 million in 1991 to the US $42285.68 million in 2018, registering an annual average growth rate of 37.85 per cent. This study also finds that the increase in the value of Indian Rupee has an inverse impact on the FDI inflow. Thus, the findings support the currency area hypothesis of Aliber (1970) . It suggests that policymakers should consider the exchange rate while formulating policy to attract FDI inflow into India.
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