Identification of the influential factors of foreign direct investment in the Indian manufacturing sector

Abstract

There are many factors that may influence Foreign Direct Investment (FDI) in a certain country. The study identifies the influential factors of foreign direct investments with an emphasis on foreign multinational companies in the manufacturing sector of India. It is believed that the growing need for FDI in the global economy is what derives the interest of both foreign investors and host countries in engaging in FDI. In the globalized world economy of the twenty-first century, the world market for foreign investments has become more competitive. FDI is welcomed by countries, especially developing ones. FDI can be an effective contributor not only to economic growth, but it is also important to management skills, technology transfers and a higher standard of living. Therefore, developing countries have made considerable efforts over the past decade to improve their investment climate by offering a wide range of investment incentives. The research highlights incentives attracting foreign investments and discusses the benefits gained from it. The first stage of the thesis is to outline the objectives of the study, with a review of literature relevant to the subject. The second stage is to collect data needed for the research. Finally, the results and discussion are presented together with some recommendations for further research. It is hoped that the outcomes of this research will provide some guidelines that will enable India to become a better place for conducting businesses and a favourable destination for foreign investments.