Foreign Direct Investment in India: An Analytical Overview

After four decades of restrictive FDI policies, in the 1990s India embarked on a broader process of reform designed to increase its integration with the world economy. The liberalization of inward and outward FDI flows was part of a broader process of reform that included a major overhaul of trade policy, as part of the package of reforms known as New Industrial Policy. Since then the policy on FDI has begun to occupy center stage in the realm of Indian economy. Despite an increase in FDI over the 90s, it was found to still account for only a small share in total investment sin the economy (-2%). This empirical work gives a vivid and categorical account of FDI in India. Performance appraisal of FDI is also given.