FOREIGN DIRECT INVESTMENT AND MACROECONOMIC PERFORMANCE IN INDIA: EVIDENCE FROM GDP, UNEMPLOYMENT, AND EXCHANGE RATE DYNAMICS

Abstract

Foreign Direct Investment (FDI) has become a critical driver of economic development in emerging economies by facilitating capital inflows, technology transfer, and managerial expertise. India, in particular, has positioned itself as a major destination for FDI, attracting investments across manufacturing, services, infrastructure, and technology sectors. This study investigates the impact of FDI on three key macroeconomic indicators, Gross Domestic Product (GDP), unemployment rate, and the USD/INR exchange rate over the period 2005–2025. Using secondary data primarily sourced from the World Bank and supported by UNCTAD and official government publications, the analysis applies correlation and regression techniques in Microsoft Excel to quantify these relationships. The objective is to evaluate the extent to which FDI inflows have influenced economic growth, labor market outcomes, and exchange rate dynamics in India. The findings are expected to provide valuable insights into the role of foreign investment in strengthening India’s macroeconomic stability and to inform policy strategies aimed at achieving sustainable growth.