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re lower in India compared to Europe and U.S, and the labour being cheap helps the foreign companies to set up their BPO and even employing the workers in their companies outside India.

Infrastructure Scenario

Due to the availability of a healthy infrastructure in the country; Indian IT industry has grown immensely.

The last few years are said to be the golden period for the Indian IT industry and the trend still shows the steady and consistent expansion, various places in the country like Chennai, Puna etc. have evolved into global IT hubs. A number of IT related exhibitions and parks developed with infrastructure similar to Silicon Valley. In the presence of all these factors that have become a strength of the Indian IT industry, it can be argued that the Indian IT industry is on the right path.

Research Aim and objectives.

The main aim of this dissertation is to identify and analyze the factors attracting the foreign direct investment into the IT industry in India and why the IT industry is still suitable for outsourcing, and studying that India is still the most preferable investment block for foreign investors considering the boom in the Indian IT industry. Dissertation also lays emphasis on studying the techniques and the IT benefit realisation.

Further the objectives of this dissertation is to examine the trend and impact of FDI inflows in India, and step used to fetch more investments, Overall impact of FDI on Indian economy shall also be brought into focus.To analyze the trend of sectoral pattern of FDI inflows in India, Examine the changing sectoral pattern of FDI policy, to study the trends and determinants of FDI inflows at the state level.

Brief review of the related literature

The most significant contributor in the India’s emerging market is the IT industry and the foreign direct investment in the telecommunication sector. In the past twenty years the service sector has expanded so rapidly and now plays an increasingly vital role in national economy as well as in the international economy. . Services sector accounts for large number of jobs and employment opportunities in most Economies around the world. The world trade and investment too has seen a rapid increase in the services sector. It was the rapid expansion in the service sector that enabled India to be one of the rapidly boomimg economies in the world in 1990’s. The Foreign Direct Investment (FDI) structure has also leaned more towards the services worldwide. In seventy’s, the share of the service sector was only one quarter of the world’s FDI stock. In 1990 the share increased to almost one half and by 2003, it reached to about 67%. The service sectors like IT related services, telecommunication, insurance services and electricity are becoming more well-known. “As most of the services are neither tradable nor storable, but must be produced where they are consumed FDI is the dominant means of delivering them to foreign markets”, states United Nation Conference on Trade, Aid and Development (UNCTAD). FDI in services sector can provide a mean for capital requirement, technology development, and business knowledge.

The sectoral composition of FDI inflow in India has gone under significant change. Three trends are evident (kumar 2004). First, the share of plantations, mining and petroleum has fallen markedly, from around 9% in 1980 and to on