Determinants of Foreign Direct Investment in India

Abstract

Tamil Nadu wears the most urbanized state of India. Its manufacturing sector is well developed and factories in the country are also the most numerous in India, and the population of skilled workers in it is also the greatest. It has been in the lead, in the fields of automotive, engineering, research and development, health care, IT and IT enabled services, textiles, cotton, field, financial and leather industries. It is also one of the top destinations in India in terms of foreign direct investment as it records 7 percent of the total foreign direct investment made in India between 2011-2021. The state has also accommodation of manufacturing facilities of over 50 fortune 500 companies and is the top destination of Japanese and Korean investments in India. It has one of the leading automotive centers in its capital Chennai. Tamil Nadu is leading investment destination in India to the foreign investors on account of its developed infrastructure and network capability as also locational incentive which serves its already developed manufacturing eco system and exports too. The economy of Tamil Nadu revolves around the service industry, manufacturing industry as well as the agricultural sector. Totals of direct investments brought about by foreign investments to the state stand at 14.9 percent. Tamil Nadu registers the second-best nominal gross state domestic product in India with US $260 billion in 2019-2020. Majorly in this paper attention will be paid to the various sectors FDI inflows in India that comprise of Manufacturing, Construction, Financial Services, Miscellaneous, Retail and Wholesale trade, Telecommunication. Thus, an effort is made to determine the FDI inflows determinants in India in the past decade between 2011-12 and 2020-2021. Growth rate was also used by the researcher to ascertain the increments or declines of FDI in different sectors over the recent decade.