Attracting Export-Oriented FDI:Can India Win the Race?

Why has India has performed poorly in attracting export oriented foreign direct investment (EFDI) as compared to its peer groups such as China. The empirical literature on the location of EFDI indicate that countries with relatively low-cost (quality) labour, good infrastructure, availability of raw materials, size of the free trade zones and outward looking policy regime tend to attract more EFDI. This paper examines India’s position vis-à-vis other countries on these factors to elicit answers and concludes that policy reforms are still required at the state level to make FDI policy more efficient and at the central level to lessen ground level hassles faced by foreign investors.