DIRECT FOREIGN INVESTMENTS IN INDIA: POTENTIAL & PERFORMANCE OF FDI INFLOWS FROM UNITED STATES AS STRATEGIC MAJOR INVESTOR

Abstract

In the recent past the US has emerged as one of the top three important trading partners for India (both in terms of Indian exports to and Imports from US). In terms of both its imports and exports, US play a major role. Over the years, the trade between US and India was very much restricted. This was mainly due to India’s proximity towards the former Soviet Union (USSR). Ever since the end of cold war and break up of USSR in 1990-91, a new chapter in trade and investments between India and US started. The trade between US and India has risen sharply in the recent past. This study presents the historical perspective of the trends in FDI inflows in India. In doing so, a detailed descriptive analysis is presented to assess the current trends, patterns of FDI inflows by sector, origin of country and regional comparison. The second part of the study includes constructing FDI potential and performance indices for India and compare with other leading emerging economies for the time period 1970 to 2005. The results reveal that though FDI in India has increased considerably during post reforms period, its position in comparison to other emerging economies is very weak, suggesting that there is still lot of potential for India to compete with its peer group.FDI inflows; Potential; Performance; India