International Journal of Social Science & Economic Research
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Dr. Shipra Rai and Dr. Chitra Choudhary

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1Dr. Shipra Rai and 2Dr. Chitra Choudhary
1. Assistant Professor (Economics), Dr. Ram Manohar Lohiya Government Degree College, Muftiganj, Jaunpur, U.P.
2. Assistant Professor, Department of Economics, University of Rajasthan, Jaipur.

Rai, Dr. Shipra, and Dr. Chitra Choudhary. "CAUSALITY BETWEEN SOFTWARE EXPORT AND FDI: EVIDENCE FROM INDIA." Int. j. of Social Science and Economic Research, vol. 3, no. 12, Dec. 2018, pp. 6537-6550, Accessed Dec. 2018.
Rai, D., & Choudhary, D. (2018, December). CAUSALITY BETWEEN SOFTWARE EXPORT AND FDI: EVIDENCE FROM INDIA. Int. j. of Social Science and Economic Research, 3(12), 6537-6550. Retrieved from
Rai, Dr. Shipra, and Dr. Chitra Choudhary. "CAUSALITY BETWEEN SOFTWARE EXPORT AND FDI: EVIDENCE FROM INDIA." Int. j. of Social Science and Economic Research 3, no. 12 (December 2018), 6537-6550. Accessed December, 2018.

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The software and related services industry has become one of the significant growth catalyst for India. This sector is a major contributor to the growth of the economy and has multiplier effect in terms of foreign exchange earnings, investment, employment and overall economic growth. India is attracting increasing attention from Multinational Enterprises (MNEs) as a base for their knowledge-based activities such as software development and global Research & Development activity. Software Technology Parks, regulatory reforms by the government, the growing Indian market and availability of skilled work force have been important factors in boosting foreign direct investment (FDI) inflows to computer software industry in India. In view of the abovementioned facts, an attempt has been made to highlight the export performance of software industry in India; to present the trend of FDI inflows in the software industry and to examine the causality between the variables namely software export and FDI. Data has been collected from various secondary sources such as database of RBI, Ministry of Commerce & Industry, Department of Industrial Policy and Promotion and various issues of Economic Survey, during the span of 2000-01 to 2016-17. Granger Causality Test has been applied. The analysis reveals unidirectional relationship among the variables, stating that software export granger cause FDI. Therefore, the study suggests that one way to maximise the contribution of FDI in India, is to improve chances of FDI crowding-in domestic investments and minimise the possibilities of it crowd-out domestic investments. Secondly, government should increase software exports by effective policies to attract FDI inflows in the sector.