Embracing FDI Flows: Crafting Strategies for India's Economic Growth

This research analyses the dynamics of foreign direct investment and its contribution to the economic growth of India. Using a multiple linear regression model with backward elimination technique, the study analyses sectorial FDI data from 2000 to 2024. Results show that technology-driven sectors, mainly Computer Software & Hardware (β = 0.478, p = 0.001), Automobile (β = 0.389, p = 0.021), and Power (β = 0.374, p = 0.025), contribute significantly to India’s economic growth peroxide as gross domestic product (GDP). Meanwhile, Telecommunications (β = −0.222, p = 0.030) and Construction (Infrastructure) (β = −0.452, p = 0.006) show negative correlations, probably due to regulatory hurdles or diminishing returns. Despite receiving the highest FDI ($119,093.37 million), the services sector shows meagre or no significant impact on GDP (p = 0.516), possibly due to profit repatriation to the home country or domestic competition. The econometric model (adjusted R² = 0.933–0.936) underscores the need for sector-specific FDI policies to maximize economic benefits. This research provides statistical evidence and recommendations for aligning FDI policies with India’s development goals of becoming a developed country by 2047; targeted interventions are needed to enhance GDP growth and achieve competitiveness at the global level.