The inflow of foreign direct investment (FDI) in India has paved the path for the economical and financial development of a country. There has been significant increase in economic growth after the liberalization policies undertaken by India in 1991 (Nagaraj 1997).
Factors that attract foreign direct investment in India
The post reform period being the prospective period for strengthening the base of the Indian economical sectors for its growth with liberalization policy.
Low employment rate in the service sector cannot sustain high growth rate for long
The service sector is one of the fastest growing sectors in India. Contribution of this sector in gross value addition in Indian economy was 52.97% during the financial year 2014-15 (Planning Commission 2015). India witnessed a rapid expansion in this sector after the liberalisation of the economy in 1991.
Inflow of foreign direct investment in the agricultural sector of India
The agricultural sector in India is the main source of livelihood for more than 70 percent of the rural population. Similarly half of the households in the rural population show some sign of poverty (Singh & Walis 2015).