Determinants of FDI in the computer software and hardware sector in India

Abstract

India’s has been a success story in the IT industry and the world has been recognising it and showing interest in investing in the computer software and hardware sector. The paper attempts to analyse the determinants of FDI in the computer software and hardware sector and to figure out the reasons for the locational preferences of the foreign investors. For this purpose, the states of India which are recipients of highest FDI inflows in the sector are studied with a view to determine the reasons for their attractiveness as investment destinations. The extent and availability of infrastructure facilities which are important to this industry and the presence of skilled workers which is a prerequisite to this industry are examined. The study finds evidence to support the preposition that presence of the required infrastructure and skilled labour which are crucial to this sector encourages foreign investors to put in their money in the locations where these are available.