International Journal For Multidisciplinary Research

E-ISSN: 2582-2160     Impact Factor: 9.24

A Widely Indexed Open Access Peer Reviewed Multidisciplinary Bi-monthly Scholarly International Journal

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Foreign Capital, Local Growth: Rethinking FDI’s Role in India’s Entrepreneurial Landscape

Author(s) Soumyadeep Paul
Country India
Abstract In emerging economies, Foreign Direct Investment (FDI) has become the engine of growth. India in particular has been the major country to attract global capital flows over the last three decades. The aim of this paper is to investigate the impact of foreign capital investment on domestic investment and entrepreneurship in India, focusing both on the opportunities and challenges provided by foreign capital inflows. FDI will spur domestic economic development by the process of accelerating capital formation, introducing new technologies in managerial practices, creating new opportunities in the market for the domestic entrepreneur. However, it could cause crowding-out in the market, increased competition for local companies, and over-dependence on foreign enterprises. The evolution of FDI policy in India will be reviewed, empirical evidence analysed in major sectors of the economy, including manufacturing, information technology, retailing, and renewable energy, and the spill-over effects of FDI analysed on domestic investment and entrepreneurship. The results indicate that while FDI has a positive impact on capital formation and entrepreneurship, the effects can be maximised by means of other domestic policies, regulatory systems, and by means aimed at protecting and promoting local enterprises. This paper concludes with a series of policy recommendations aimed at balancing the inflow of foreign investment with the promotion of domestic entrepreneurship, leading to economic growth.
Keywords Foreign Direct Investment (FDI), Domestic Investment, Entrepreneurship, Economic Growth, India, Multinational Corporations (MNCs).
Published In Volume 7, Issue 6, November-December 2025
Published On 2025-11-12
DOI https://doi.org/10.36948/ijfmr.2025.v07i06.60354

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