*Vijayanagar Shri Krishna Devaraya University, Bellary, Karanataka. Email:mhosamane@yahoo.com
**Department of Studies in Economics and Cooperation, University of Mysore, Mysore. Email:sadhanahv@rediffmail.com
Online published on 31 January, 2012.
The paper examine the role of FDI in promoting output growth in top six Indian manufacturing industries, which are received highest FDI inflows during the period 1991–2006. The study used panel data to investigate the impact of FDI in enhancing the growth of output in top six industries. The panel unit root test has been conducted by using IM-Peasaran and Shin test. The test is used to select between fixed model and random effect model. The test suggests the fixed effect model is appropriate. The result shows that FDI inflows, export intensity, and capital labour ratio are significant and positively influence on output growth, where as import intensity, and wage share turned out to be negative. Finally the study finds out favourable effect of FDI in increasing output of top six industries. Thus it is advisable to open up the other industries for FDI except few, in order to achieve higher economic growth in India.
