Foreign direct investment (FDI) and outward foreign direct investment (OFDI): A comparative study of India’s investment dynamics

Abstract

This paper explores the dynamics of Foreign Direct Investment (FDI) and Outward Foreign Direct Investment (OFDI) in India, focusing on the factors driving these investments, their economic impacts, and the strategic role they play in shaping India's global economic position. FDI has historically played a crucial role in India’s economic growth by facilitating capital inflows, technology transfer, and employment generation, while OFDI reflects India’s increasing global presence through strategic investments by domestic firms in foreign markets. This study examines the trends, sectoral distribution, and policy frameworks that govern both FDI and OFDI, highlighting the symbiotic relationship between these two forms of investment. Furthermore, it provides a comparative analysis of FDI and OFDI flows, offering insights into how these investments contribute to India’s economic integration with global markets. The paper also discusses the challenges, opportunities, and future outlook for FDI and OFDI, with particular attention to regulatory reforms, infrastructure development, and emerging sectors such as digitalization and green energy.