AI and Foreign Direct Investment (FDI) in India : How AI-Driven Economies Attract Global Investors

Abstract

Artificial Intelligence (AI) is rapidly transforming India’s economic landscape, driving innovation, enhancing productivity, and attracting global investment. As AI adoption accelerates, its role in shaping Foreign Direct Investment (FDI) inflows has become increasingly significant. This study examines how India's AI-driven economy fosters an attractive environment for foreign investors by leveraging technological advancements, policy initiatives, and a growing digital infrastructure.

The research explores key factors influencing AI-based FDI in India, including government policies such as the National AI Strategy, tax incentives for AI startups, availability of a skilled workforce, and AI applications across critical sectors like finance, healthcare, and manufacturing. Through a comparative analysis of India’s AI investment ecosystem with global leaders such as China, the United States, and the United Kingdom, the study highlights India’s strengths and areas for improvement in attracting FDI in AI-driven industries.