Sectoral Contribution of FDI in India (With special reference to Automobile, Telecommunication, Services and Computer Hardwares & Softwares sectors)

Abstract

After opening of the Indian economy, the contribution of Foreign Direct Investment to the Indian Economy is remarkable. The Foreign Investments not only brings in capital into the host country but also the technological advancements, best practices in managing the company and also efficiency. The Government of India is concentrating on attracting the FDI more than the FII. This is because Foreign Direct Investment is more stable and it has a presence in the host country. On the other hand, FIIs are unstable and they invest in the shares of the company and also they move out the capital when the market conditions are not favourable for them. Also the Government of the day is focusing on attracting more Foreign Direct Investments. This is evident from the jump in the Ease of Doing Business Index rank of India in the recent report. This article tries to analyse the Sectorwise contribution (Automobile, Telecommunication, Services and Computer Hardwares & Softwares sectors) of FDI in the Indian economy. The analytical tools such as regression and correlation have been used. The results show that the computer hardware and software sector has contributed the most to the GDP of India among the sectors considered. The least contributor is the Telecom Sector. The study has also given some suggestions to the policy makers so that the different sectors of the economy remain attractive to the FDI.