ISAS Insights

One of the noteworthy dimensions of India’s increasing integration with the world economy has been the increase in both gross foreign direct investment (FDI) inflows into and outflows from the country over the last decade. The simultaneous spurt in both FDI inflows and outflows has meant that FDI has not been a significant source of balance of payments financing on a net basis, at least until 2006 (Figure 1). The rise of India as a source and host of FDI has begun to generate a sizeable literature on the determinants and characteristics of such flows at an aggregate level. However, much less work has been devoted to the analysis of FDI inflows and outflows at the bilateral level, primarily due to the paucity of data.