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Stream/Area:
-
Subject:
-
Paper ID:
IJSREM65774
Volume:
10 |
7 |
Jul 2026
Pages:
1-34
Publication Frequency:
Monthly (12 issues per year)
License:International Journal of Scientific Research in Engineering and Management follows the Creative Commons Attribution 4.0 (CC BY 4.0) License, allowing free use and distribution with proper attribution.
Department of MBA
CMR Institute of Technology Hyderabad
Department of MBA
CMR Institute of Technology Hyderabad
This study provides a comprehensive analysis of foreign capital movements in India, focusing on the entry and exit patterns of Foreign Direct Investment (FDI) and Foreign Institutional Investment (FII) and their subsequent impact on economic growth. Utilizing a descriptive and analytical research design based on secondary data from 1991 to 2025, the research examines the structural transformation of the Indian economy following liberalization reforms. The findings indicate that while FDI serves as a stable, long-term driver for capital formation, technology transfer, and industrial development, FII inflows—though vital for market liquidity—exhibit high volatility and a significant influence on stock market fluctuations. Statistical analysis reveals a weak positive relationship between FDI and GDP growth, while FII shows a complex relationship with market performance and volatility. The study concludes that while foreign capital is essential for India’s development, sustainable economic progress requires a balanced approach that integrates these inflows with robust domestic economic management and policy stability.
KEYWORDS
The study concludes that foreign capital has played a pivotal role in transforming the Indian economy since the 1991 liberalization reforms. While FDI has established itself as a stable, long-term contributor to capital formation, technology transfer, and industrial growth, FII has served as a vital source of liquidity for Indian financial markets. However, FII's high volatility poses risks of market instability during times of global financial stress. Therefore, while foreign capital remains essential for India’s development, sustainable economic growth ultimately depends on a combination of these foreign inflows and strong domestic economic management.
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Publication Date
7/3/2026
Peer Review Type
Double-Blind Peer Review
Review Rounds: 2
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Conflict of Interest
The authors declare no conflict of interest related to this research work.
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