Exploring Tax Policy Changes and Foreign Direct Investment Inflows in the Indian Economy

The Indian Economy has been witnessing growth since the onset of 21st century at a phenomenal pace in which Foreign Direct Investment inflows has played a significant role. Foreign Direct Investment and taxes are two distinct phenomena where taxes are dependent on the macroeconomic regulatory framework subject to amendments from time to time. Foreign Direct Investment covers a broad perspective where it is affected by numerous macroeconomic and global phenomena. However, it also involves foreign investor’s perception regarding the tax structure of the host country. This paper tries to establish a relationship between taxation and FDI inflows in the context of Indian Economy. This paper further attempts to study the implications of tax structure and its changes in Foreign Direct Investment inflows in Indian Economy. This study explains the significance of taxation as a determining variable in Foreign Direct Investment inflows.