A study on foreign direct investment inflows into service sector in India

Abstract

An essential factor in a country’s economic growth is foreign direct investment (FDI). FDI boosts domestic capital,productivity, and employment, which in turn helps the economy thrive. Many economic sectors rely heavily on FDI to upgrade their technology, skills, and management capacities. This article aims to analyze the flow of FDI into India, with a specific focus on the service sector and its changes over time. The study is based on secondary data sources. The inflow of FDI into India’s service sector is examined using correlation analysis. Secondary data covering the period 2017–2023 forms the basis of the study. The findings reveal that there has been a decline in total FDI inflows into India during the past 2 years, while FDI inflows into the service sector increased during the same period. The study also examines the relationship between gross domestic product (GDP) and FDI inflows. The results indicate that FDI has a significant and positive impact on GDP. However, the analysis shows no significant relationship between Gross Value Added (GVA) from financial services and GDP from the service sector