Outside Direct Investment Strategies in India

Abstract

In India, ODI is considered as a developmental tool, which helps in achieving self-reliance in various sectors and in overall development of the economy. India after liberalizing and globalizing the economy to the outside world in 1991, there was a massive increase in the flow of Outside direct investment. This study analyses ODI inflow into the country during the Post Liberalization period. Further, the trends of ODI inflow into the country are projected for a period of five years from 2010-11 to 2014-15 using Autoregressive Integrated Moving Average (ARIMA) forecasting technique. The study tries to examine the various set of factors which influence the flow of ODI Identifying the causes for low inflow and suggestive remedial measures to increase the flow of ODI in India with that of other developing nations in the world. Outside Direct Investment (ODI) plays a very important role in the development of the nation. It is very much vital in the case of underdeveloped and developing countries. A typical characteristic of these developing and underdeveloped economies is the fact that these economies do not have the needed level of savings and income in order to meet the required level of investment needed to sustain the growth of the economy. In such cases, outside direct investment plays an important role of bridging the gap between the available resources or funds and the required resources or funds. It plays an important role in the long-term development of a country not only as a source of capital but also for enhancing competitiveness of the domestic economy through transfer of technology, strengthening infrastructure, raising productivity and generating new employment opportunities.