An analytical study on the effect of COVID-19 on foreign direct investment (FDI) in India

Abstract

The impact of the COVID-19 epidemic on remittance inflow to India is evaluated in this article. The influx of remittances has been significantly reduced because to this epidemic. To evaluate the short-, medium-, and long-term effects of COVID-19 on the Indian economy, a situation study was conducted using 2019-20 remittance data. This data was used to address the remittance inflow. Right now, the countries that provide money are all shut down, which has put a lot of people out of work. In particular, our analysis shows that COVID-19 had a negative effect on GDP, FDI, and unemployment via its effect on remittance inflow. Particularly hard-hit are emerging nations, as this trend is most pronounced in the primary and manufacturing sectors, which are the ones that get the lion's share of foreign direct investment. Foreign direct investment (FDI), a key factor in economic development, may help nations weather the storm and recover stronger than before. Approximately three quarters of the foreign direct investment (FDI) inflows to the nation (from October 2019 to June 2020) went to only four Indian states: Maharashtra (28%), Karnataka (19%), Delhi (16%), and Gujarat (10%). This highlights potential opportunities for the other Indian states in the future. Low-skilled manufacturing received only 11% of all foreign direct investment (FDI) during the last 19 years, although India has great potential to attract big FDI in this area.