Analysis of Foreign Direct Investment in Indian Services Sector

International Journal of Economics and Management Studies

© 2019 by SSRG - IJEMS Journal

Volume 6 Issue 4

Year of Publication : 2019

Authors : Goonipooti Dinesh, Dinesh Kumar Choudhury, Tarun Khandelwal

10.14445/23939125/IJEMS-V6I4P101

How to Cite?

Goonipooti Dinesh, Dinesh Kumar Choudhury, Tarun Khandelwal, "Analysis of Foreign Direct Investment in Indian Services Sector," SSRG International Journal of Economics and Management Studies, vol. 6,  no. 4, pp. 1-6, 2019. Crossref, https://doi.org/10.14445/23939125/IJEMS-V6I4P101

Abstract:

After the LPG reforms that the Government of India undertook in the year 1991, there was a drastic change in the functioning and growth of the Indian economy. Many things were removed like licences, limitations and caps on foreign investment to many sectors in the economy. The sector that benefitted the most from this restrictive withdrawal by the government was the Services Sector. This study has tried in identifying the determinants of Services sector FDI and also to inspect any long run relationship between the variables used in the study. For the analysis undertaken the time period taken in consideration is from 2001 to 2017. The techniques used in the study include Ordinary Least Squares, Johansen Co-integration. The empirical analysis concludes that Gross Domestic Product, Bombay Stock Exchange, Expenditure on Infrastructure has a positive relation with the Services Sector Foreign Direct Investment. Exchange rate and Inflation has a negative relation with the Services Sector Foreign Direct Investment. From the policy perspective government should increase expenditure on infrastructure and take care of fluctuations in exchange rate and inflation thereby relaxing the restrictions on the inflows of FDI into Services sector helps the service led economy like India to boost its performance.

Keywords:

Service Sector FDI, GDP, Inflation, Expenditure on Infrastructure, Exchange Rate.

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