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Interstate Distribution and Sectoral Composition of FDI Inflows in India

Author

Listed:
  • Febina K.
  • Thomas Paul Kattookaran

Abstract

Foreign direct investment (FDI) refers to obtaining the ownership in a foreign business entity. It can also be attributed that FDI circulates capital across national boundaries. It can be defined as an investor based in one country (home country), acquires an asset in another country (host country), with the intention to manage it. It is this dimension of management that distinguishes FDI from portfolio investment in foreign stocks and other financial instruments. For a terribly populated country like India, a good quantum of resource is needed to fund its various developmental needs, which the country does not have. To strengthen its infrastructure, expertise and knowledge base, FDI is inevitable. Realizing these facts, the government is now moulding a robust business environment to smoothen the flow of FDI. An interstate comparison of FDI in India makes it quite apparent that there exists huge variations in the inflow of FDI to different states. While some regions like Delhi, Bombay, etc. receive soaring flow of FDI, it is very stumpy in regions like Patna, Guwahati, etc. An overview on the sectoral distribution of foreign investment discloses the wide disparity in the distribution of foreign capital among various sectors. While some sectors like service, construction, etc. receive elevated flow of foreign capital, others lie fully ignored by the foreign investors. JEL Classification: F21, F23, F63, O10

Suggested Citation

  • Febina K. & Thomas Paul Kattookaran, 2018. "Interstate Distribution and Sectoral Composition of FDI Inflows in India," Foreign Trade Review, , vol. 53(4), pages 271-282, November.
    • Handle: RePEc:sae:fortra:v:53:y:2018:i:4:p:271-282
    DOI: 10.1177/0015732518797026
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    References listed on IDEAS

    as
    1. Laura Alfaro & Areendam Chanda & Sebnem Kalemli-Ozcan & Selin Sayek, 2006. "How Does Foreign Direct Investment Promote Economic Growth? Exploring the Effects of Financial Markets on Linkages," NBER Working Papers 12522, National Bureau of Economic Research, Inc.
    2. Laura Alfaro & Areendam Chanda & Sebnem Kalemli-Ozcan & Selin Sayek, 2006. "Foreign Direct Investment, Financial Markets and Economic," 2006 Meeting Papers 369, Society for Economic Dynamics.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    FDI; interstate variation; sectoral composition; technology transfers; economic development;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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