FDI in India and its Growth Linkages

Foreign direct investment (FDI) plays a multidimensional role in the overall development of the host economies.  The present study aims at providing a detailed understanding of the spatial and sectoral spread of the FDI-enabled production facilities in India and their linkages with the rural and suburban areas. The corresponding impact on output, value-added, capital and employment in the regions receiving FDI has also been worked out.  FDI-enabled plants in India are spread across various states with relatively high concentration in Maharashtra, Gujarat, Tamil Nadu, Karnataka and West Bengal. A significant proportion of manufacturing plants are located in small cities (population less than 5,00,000). More than two-fifth of the market capitalisation originates in small cities. FDI-enabled service facilities have a relatively high concentration in Andhra Pradesh, Karnataka, Maharashtra and Tamil Nadu. The proportion of service facilities located in small cities is relatively less significant vis-a-vis manufacturing plants.