Analyzing the Impact of FDI on the Indian Automobile Companies

Abstract

This study looks at the relationship between macroeconomic factors, foreign direct investment (FDI), and the profitability of Indian automakers during a 14-year span, from 2010 to 2023. Through panel data analysis of secondary data from seven selected automobile firms, the study reveals a negative correlation between FDI inflows and firm profitability, highlighting the significant impact of external investment (FDI) on industry performance. Through an examination of the relationship between FDI, Gross Domestic Product (GDP), inflation rate, and capital employed, the study reveals the intricate corporate policy maze that is evident in the Indian automobile industry. We get to know that FDI is critical to the advancement of technology, manufacturing volume, and the export capacity of automobile sector in many countries. Understanding how FDI influences the competitiveness and efficiency of Indian automobile companies is important. This study discusses the benefits of foreign investment for policymakers and industry stakeholders as well as researchers. India can transform itself as a significant contender in the global automobile industry, thereby, driving sustainable growth, innovation, and economic development in the automobile sector through the use of such ideas.