Abstract

This paper explores the intricate relationship between economic crises and Foreign Direct Investment (FDI) in India. It examines how various crises, from the Asian financial crisis of 1997 to the global financial crisis of 2008, have impacted the volume, nature, and strategies surrounding foreign investment in the Indian market. The analysis reveals a clear correlation between economic crises and a decline in FDI inflows. The impact seems to be more pronounced during global crises compared to regional ones. Understanding these historical trends is crucial for policymakers as they formulate strategies to attract and retain FDI in the face of future economic turbulence. The paper also delves into investor behavior during crises. Investors tend to adopt either risk aversion or opportunity-seeking strategies. The interplay between these approaches defines investment patterns during economic downturns. Furthermore, the paper examines the FDI strategies adopted by India during crises. These strategies include a mix of liberalization, incentivization, and initiatives like "Make in India" aimed at creating a more investor-friendly environment. Finally, the paper explores potential areas for improvement in government responses to crisis-driven FDI. This includes enhancing policy transparency, streamlining approval processes, strengthening local linkages, and offering incentives for sustainable investments. By focusing on these areas, India can build greater economic resilience and weather future crises more effectively.

Keywords