Impact Analysis of Foreign Direct Investment Inflow on Gross Domestic Product Growth in India

Capital flow is a significant factor in many developing economies for generating employment opportunities and income, leading to improved GDP growth. In such scenarios, Foreign Direct Investment (FDI) inflows from various countries to developing nations like India have been aggressively pursued. Foreign Direct Investment proves to be a boon for countries like India. In the fiscal year 2022, Foreign Direct Investment inflows to India reached the value of US $58.77 billion. This positive trend is reflected in the economic growth, with a GDP growth rate of 7.2% in the fiscal year 2022–2023. This paper aims to analyze the pivotal contribution of Foreign Direct Investment (FDI) and Gross Domestic Product (GDP) in India and to evaluate the significant relationship between FDI inflow and GDP growth in India from 2012 to 2022. The data reveals that FDI is linearly correlated with GDP in India, indicating a positive correlation between FDI and GDP growth.