Foreign Direct Investment and Agricultural Growth in India during Post-WTO Era (1995–2024): A Statistical Investigation

Abstract

India’s economic reforms initiated in 1991 marked a decisive shift toward global integration, further strengthened by the establishment of the World Trade Organization (WTO) in 1995.  In evolving policy framework, Foreign Direct Investment (FDI) has played a pivotal role in shaping economic development.  Nevertheless, its contribution to the agricultural sector remains uneven and requires systematic examination.  This study investigates the relationship between FDI inflows and agricultural growth in India during the post-WTO period.  The analysis is based on time series data and employs robust econometric techniques including the Autoregressive Distributed Lag (ARDL) mode, Bounds Testing approach, and Vector Error Correction Model (VECM) to capture both short-run and long-run term although its short-term effects are relatively weak.  The study findings that domestic investment and trade openness act as complementary factors that enhance the effectiveness of FDI, while inflation adversely affects agricultural performance.  The study concluded that FDI supports technological advancement, infrastructure development and market expansion in agriculture.  It emphasizes the importance of well-designed sector-specific policy measures to strengthen the role of FDI in promoting sustainable agricultural growth in India.