Facts and Factors of FDI in India

Different economies offer different business advantages to the foreign investors with the intention of receiving greater amounts of FDI than their peers. But the flow of FDI favours those global locations where the investors find some unique advantages leading to profitability and growth. India has been experiencing a smart growth of FDI inflows since 2008. Liberalized India had adopted a great many foreign trade policies to attract FDI. But India’s performance in attracting inward FDI in the post-liberalized period still stays below the desired level. The Inward FDI Potential Index of UNCTAD captures several factors expected to affect an economy's attractiveness to foreign investors. Empirical studies identified a number of factors that determine the FDI flows. From these identified factors, UNCTAD selected a set of determinants to define countries’ attractiveness to the foreign investors. This treatise analyzes each of the factors of the UNCTAD’s Inward Foreign Direct Investment (FDI) Potential Index in the Indian context and compares them with the actual scenario prevailing in the country.