Analysis of factors influencing foreign direct investment for manufacturing sector in India

Foreign Direct Investment (FDI) plays an important role in developing countries like India. The purpose of this research was to determine the key factors influencing FDI inflow in India in order to successfully attract FDI investors. This study consists of primary data with the help of the questionnaire consisted of micro and macro aspects identified in the literature review and a pilot study of (eight) questionnaires. Reliability test was conducted to know the reliability of the responses. The descriptive statistical analyses and factor analysis were performed by using the Statistical Programme for Social Sciences (SPSS 15.0) to identify the influential factors. Study results that resources availability, political and economic conditions, Policies of the country are major factors that influences FDI inflow for manufacturing sectors in India. Natural resources, availability of bank and interest rate are the major resource variables influences FDI inflow. Political stability in the country, terrorism activity within the country and favourable interest rates also decides FDI inflow to the country. Trade policy and labour policy of the country is helpful to increase firms and business also impacts FDI inflow to the country.