The First Three Decades of Foreign Direct Investment (FDI) in India

Temporal Variation, Sectoral Trends, and Time-Series Analysis

Authors

  • Pampa Das Kadi Sarva Vishwavidyalaya, Gandhinagar, Gujarat, India.
  • Rasananda Panda Mudra Institute of Communications, Ahmedabad, Gujarat, India.
  • Jigarkumar H. Shah Pandit Deendayal Energy University, Gujarat, India.

DOI:

https://doi.org/10.5281/zenodo.11230169

Keywords:

India, Foreign direct investment, Time-series analysis, Sectoral investments, Indian economy, Economic liberalization, Forecasting

Abstract

This article presents a synoptic view of India’s FDI journey up to the financial year (FY) 2020 since the liberalization of the Indian economy in 1991. A semi-log model suggested that India’s FDI grew at about 20% per year over the last three decades. Meanwhile, sectoral investment patterns exhibited a clear shift from the automobile to the services sector. With a cumulative inward FDI of $697 billion, India’s FDI journey has been promising thus far, yet it lags well behind China and Singapore. An Auto-Regressive Integrated Moving Average (ARIMA) was applied for time-series model development (training, testing, and forecasting) using 29 years of FDI data. The non-stationary behavior of original FDI-time data was circumvented by using their logarithmic functions. Supported by a small prediction mean square error (0.0016), the predicted values for the next two financial years (2020-21 and 2021-22) at $87.9 billion and $94.8 billion, respectively, are considered to be reliable within the 95% confidence limit.

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Published

2023-12-31

How to Cite

The First Three Decades of Foreign Direct Investment (FDI) in India: Temporal Variation, Sectoral Trends, and Time-Series Analysis. (2023). Liberal Studies, 8(3), 473-492. https://doi.org/10.5281/zenodo.11230169

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