Abstract
The study examines the trend in foreign direct investment (FDI) inflow to India for the period 1971 to 2016. The flow of FDI to world, developed countries, developing countries and India has been studied. Trend of FDI inflows to India along with its growth rate is also studied. This paper tries to come up with logic for variations in the flow and change in the macro-economic determinants of foreign direct investment (FDI) during the study period ranging from 1991–2016. After checking for stationarity, regression has been applied to estimate the various economic determinants that affect FDI inflows. Empirical results revealed that market size, external debt, exchange rate, reserves, total trade, and physical infrastructure are the vital macro-economic determinants of FDI inflows in India. Political and economic stability, infrastructure, law and order situation, curtailment of external debt, encouragement to domestic savings need to be ensured by the government to magnify the FDI inflows to India.
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