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The Impact of Foreign Direct Investment on India's Sectoral and Regional Economic Growth: An Analytical Study

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  • Konnur, Mallikarjun
  • Chubachi, Mantesh

Abstract

The research investigates how Foreign Direct Investment (FDI) affects Indian development by studying its sectorial and geographical placements. The research evaluates how FDI affects GDP growth, industrial expansion, and employment generation and establishes what draws investors to India. The research uses data from the DPIIT Department for Promotion of Industry and Internal Trade and secondary sources to conduct statistical assessments of FDI movements and their economic impact. The highest inflow of foreign direct investment segments between services, computer software, hardware, and trading, but the states of Maharashtra, Karnataka and Gujarat receive the most investments because they offer robust infrastructure and supportive policies. The available investment capital mainly flows toward sections of India that already possess adequate development, which produces unequal distribution throughout the country. The tax treaties between Mauritius and Singapore make them dominant sources of FDI in the country. The report advises implementing new policies because it suggests establishing updated regulations with infrastructure initiatives alongside special incentives for upcoming technology sectors. The Indian economy needs to solve investment inequality and administrative bottlenecks to improve its appeal to worldwide investors. Ministerial and investor groups can use the findings to develop strategies that maximize their FDI-mediated economic expansion.

Suggested Citation

  • Konnur, Mallikarjun & Chubachi, Mantesh, 2025. "The Impact of Foreign Direct Investment on India's Sectoral and Regional Economic Growth: An Analytical Study," Asian Journal of Agricultural Extension, Economics & Sociology, Asian Journal of Agricultural Extension, Economics & Sociology, vol. 43(3), pages 1-9.
    • Handle: RePEc:ags:ajaees:368226
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    File URL: https://ageconsearch.umn.edu/record/368226/files/Konnur4332025AJAEES132352.pdf
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    References listed on IDEAS

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    1. Alfaro, Laura & Chanda, Areendam & Kalemli-Ozcan, Sebnem & Sayek, Selin, 2010. "Does foreign direct investment promote growth? Exploring the role of financial markets on linkages," Journal of Development Economics, Elsevier, vol. 91(2), pages 242-256, March.
    2. Chakraborty, Chandana & Nunnenkamp, Peter, 2008. "Economic Reforms, FDI, and Economic Growth in India: A Sector Level Analysis," World Development, Elsevier, vol. 36(7), pages 1192-1212, July.
    3. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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    Cited by:

    1. Satyendra Kushwaha & Rajkishan S. Nair, 2026. "Dynamic interlinkages among FDI, remittances, and economic growth in India," SN Business & Economics, Springer, vol. 6(1), pages 1-24, January.

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