Abstract
The chapter investigates the role of foreign direct investment (FDI) on performances of Indian services at sector level. Service sector is marked as one of the fastest growing sectors in India, contributing more than 65 percent of GDP. The maximum share of FDI inflows in India is also captured by service sectors. So FDI inflows can have significant impacts on services. We collect quarterly data of components of services from GDP estimates of Central Statistical Office (CSO) and monthly data of sector wise FDI inflows from DIPP over the period January 2009 to March 2016 in India. After matching the data series, we form a balanced panel for four basic service sectors as classified by CSO. The stochastic properties are looked into by carrying out LLC and IPS panel unit root tests. Empirical results from the estimate of Generalised Method of Moments (GMM) suggest that FDI Inflows enhance performances of Indian services.
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