Foreign Direct Investment and Export Dynamics in India: Unveiling the Role of Brownfield and Greenfield Investments

This article undertakes an analysis of the impact of Foreign Direct Investment inflows (IFDI) on India’s export performance during the post-reform era spanning from 1991 to 2019. Additionally, it delves deeper into a refined sub-sample analysis, specifically examining the relationship between Greenfield Investments and Brownfield Investments concerning exports, focussing from 2003 to 2019. The paper’s main contribution lies in analysing types of FDI inflows with exports. The Autoregressive Distributed Lag (ARDL) model is being employed to test the relationship among the aggregate variables, aiming to establish a long-run relationship. The findings indicate the existence of a stable and long-run substituting relationship between aggregate FDI inflows and aggregate exports. However, a distinct disparity arises when comparing the two specific types of FDI. Notably, the study reveals that Greenfield Investments wield a substantial and statistically significant influence on export performance, whereas Brownfield Investments fail to exhibit a similar impact. These findings have important implications for analysts and policymakers in formulating policies encouraging FDI inflows and promoting exports. Understanding the variation in types of FDI and their effects on exports is crucial for developing effective strategies.