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India has adopted the policy of foreign investment with the aim of managing deficit in balance of payments and for promoting economic development in the country. The flow of foreign investment picked up an upward trend after the introduction of economic reforms in 1991 in which, India has liberalized its foreign policy by taking series of measures for attracting foreign investors. The primary aim for opening the door of the economy for foreign capital is managing the Balance of Payments (BoP) and further accelerating the growth of capital market (Sarkar, 2017). The two major routes from where foreign investors can enter the Indian market are Foreign Direct Investment (FDI) and Foreign Institutional Investors. FDI is considered as a stable form of foreign investment in which investment is made by a company based in one country in to another company based in other country. Whereas foreign institutional investors are institutional bodies situated in a foreign country and make investment in a domestic country through stock markets.

A lot of studies have been done in this area covering different economic variables. The few studies among them are discussed below:

(Teli, R.B., 2014) studied that FDI has positive impact on the related economic indicators on Indian economy and gave suggestion that Government of India should attract FDI through favorable policies and efforts should be made to avoid uncertainties. The Mauritius and Singapore were on the top in terms of FDI inflows. As far as sector is concerned, the service sector scored highest position for attracting FDI inflows.

Nagpal, Pooja, Chandrika, R & Ravindra,  H V (2016) studied the relation between  foreign capital flows and stock market volatility and analysed the impact of FDI and FII flow on Indian Stock market (BSE Sensex and NSE Nifty) between a time zone of 2005-06 to 2014-15. This is clearly evident from above literature that there is positive relationship between key economic indicators and Foreign Investment inflows specifically in the form of FDI. The time period considered in above studies is not recent and hence this study is undertaken for analyzing the impact of FII on Exports and Imports between a period of 2005-06 to 2019-20.

Thomas, Asha Elizabeth (2016) tried to study the impact of FDI on Indian economy by showing correlation of FDI with different economic parameters. Further trends in FDI flows in Indian economy have also been discussed.

Sultana et.al (2019) studied the impact of FDI on Indian economy with the help of a model in which the author clubbed the factors of FDI like foreign exchange reserves, exchange rate, import and export. Further the factors like GDP, Human Development Index (HDI), Sensex Index, population, and Inflation have been considered as economic variables. The regression model is used for studying the impact of FDI on economic variables. The findings of the study showed that there is considerable impact of  FDI on HDI, population and Sensex in comparison to rest of the factors. Prasad and Lakshmi (2017) have also studied the role of FDI and FII in the growth of Indian economy. For studying the growth, GDP has been taken as dependent variable.

Sairam (2018) examined the various set of factors which influence the flow of FDI. The author further examined the causes for low inflow of FDI. The study has also given suggestions in form of remedial measures that can push up the FDI in India.

Lakshmi and Subhamathi (2018) discussed the importance of Foreign Institutional Investors (FII) and shown its impact on Indian economy. The author presented the trend and growth of FII in India and showed that there is significant growth with the number of FIIs.

Sarkar (2017) in his study, analyzed empirically the impact foreign investment considering FDI as well as foreign institutional investment on the variable economic growth. The author has taken Gross Domestic Product Growth Rate (GDPG) of India as a proxy for economic growth of India. It has been shown that both the FDI and foreign institutional investment, individually, considerably influence the economic growth of India. This is also stated that national and international policies of India should be so designed that it creates a favorable environment in India so as to attract more and more foreign funds, i.e. both FDI and foreign institutional investment.

Kapoor & Sachan (2015) in his study made an attempt to study the relationship and impact of FDI & FII on Indian stock market. For this purpose, statistical measures correlation and regression analysis have been used. In this study, the dependent variable has been considered as Sensex and CNX Nifty. The time period from 2002 to 2011 have been used and found that FDI has no significant impact on stock market but FII sets the trend of Indian stock market.

Dhadurya (n.d.) studied the impact of foreign direct investment on gross domestic product of India during 2000-01 to 2018-19. In this study the author analyzed the FDI impact on GDP in India.  The linear regression have been used as statistical measure for testing the research hypothesis. Finally this is concludes that The P-value related to FDI is less than 0.05. So, Null hypothesis is rejected and found that there is significant impact of FDI on the GDP of Indian Economy.

Jonardankoner et.al (2018) discussed and analyzed the impact of FDI inflows into different sectors of the economy. In this study, this is shown that, Indian economy has received a lot of FDI across different sectors for the last two decades. The service sector came up as a dominant sector, which had attracted about one fifth of the total FDI inflows.

Pahwa (2018) analyzed the impact of foreign investments inflows on the economic growth of India. The study is based on secondary data and used regression technique.  The results had reported that FDI has a significant impact on the growth of an economy.

Sood (2015) in the paper studied the significance of FDI and FII for the economic growth of India during 2001-2015. The results concluded that FDI significantly affects the economic growth of India but as far as FII is concerned this is statistically insignificant. It is also mentioned that Mauritius has emerged as a most dominant source of FDI during the study period.

Aggarwal (2017) studied the trend and pattern of flow of FDI and FII in India. It is shown that there is strongly positive correlation between FDI and Sensex and there is a weak negative correlation between Foreign institutional investmentg and Sensex. The study concluded that there is no impact of FDI and foreign institutional investment on BSE Sensex.

Banerji (2013) discussed the effects of Foreign Direct Investment (FDI) with respect to Indian economy and tried to analyze the merits and demerits of FDI upon implementation in the Indian domestic market.

Muthusamy & Sundararajan (2019) presented the recent efforts taken by the government for encouraging the FDI into various sectors. In this study this is stated that in the last ten years India has shown a tremendous increase in Foreign Direct Investment into the various sectors in economy. The author specifically studied the impact of make in India scheme on FDI during a period of five years.

The above literature clearly shows that there is a relationship between FDI, Foreign Institutional Investors and various economic indicators like stock market indices, economic growth, GDP etc. This study has focused on the relationship between total foreign investment inflows i.e. FDI and Foreign Institutional Investors and Exports and Imports.

The journey of liberalizing the norms for foreign investment has crossed a number of milestones in different years for various sectors in the economy. The following Table 1 presents a brief initial journey of India for allowing foreign investors:

Table -1: Journey of Foreign Investment in India

Establishment of East India Company of Britain.	This was a colonial era where British capital came to India and journey of foreign investment began.
Before Independence	British companies were main source of majority of FDI
After Second World War	Japanese companies started investment in the Indian Market.
After Independence	The industrial policy of 1965, allowed MNCs to venture through technical collaboration in India
Enactment of Act in 1973	Foreign Exchange Regulation Act. 1973 came into existence
Introduction of Economic Reforms in 1991	India introduced economic reforms and welcomed FDI inflows by adopting a more liberal foreign policy for restoring the confidence of foreign investors
1999	Enactment of Foreign Exchange Management Act. 1999, that replaced the Foreign Exchange Regulation Act. 1973
2010	The consolidated sectoral requirements and other conditions are prescribed by the Department for Promotion of Industry and Internal Trade (DPIIT) (earlier known as the Department of Industrial Policy and Promotion). These requirements must be complied with by foreign investors who are targeting investment in Indian companies.
2017	(FDI) policy of 2017 is the last policy framework issued by the DPIIT

Source: (Teli, R.B , 2014), Lexology (2021)
The launch of Make in India programme has provided fuel to the flow of foreign investment and it has boosted tremendously as FDI inflow during the period April 2014 to March 2020 has been USD 357.35 Billion. This was landmark figure as the amount is nearly 52% of cumulative FDI in India since April 2000. However, In 2019-20, FDI inflow stood at a record of USD 73.45 Billion, which is the highest value recorded for a fiscal year ever (Make in India, n.d.). Presently FDI is permitted in almost all sectors except few ones like atomic energy, railway operation, real estate, Nidhi Company, Chit funds etc. The FDI is permitted in three categories i.e. (a) 100 % limit through automatic route, (b) up to 100% limit through government route and (c) up to a limit of 100% through automatic route & government route.
In recent years, Government of India (GOI) has liberalized norms for FDI in various sectors like in Union Budget of 2019-20, GOI had made proposal for opening up the door for FDI in Aviation sector. After this the strategic disinvestment of M/s Air India was announced as Finance Minister on July 27, 2020, notified changes in FDI rules for permitting Non-Resident Indians (NRI) so that they may acquire 100% in Air India (Damodaran & Chakravarty , 2020). The foreign investment in a country plays a vital role in the development of different sectors like it stimulates employment opportunities, enhances country’s technological sector, develops human resources and also help in developing backward areas.

Research Design The study is based on secondary data as this is empirical in nature. The data was collected from different websites of RBI, FIPB and other Government and Non-Government. For analyzing the data correlation and regression are used and SPSS is utilized for conducting analysis. In this analysis, Foreign Investment Flows has been considered as independent variable and Export and Import are dependent variables. Time period from 2005-06 to 2019-20 have been utilized for this study. Model Building: Model (a): Y [(Exports)] = a + b1 X1 [Foreign Investment Inflows (FII)] H01: FII has no significant impact on Exports. Ha1: FII has significant impact on Exports. Model (b) Y [Imports] = a + b1 X1 [Foreign Investment Inflows (FII)] H02: FII has no significant impact on Imports. Ha2: FII has significant impact on Imports.

Table No. 2 present the flow of Foreign Investment Inflows (FII) in US $ Million between a period of 2005-06 to 2019-20. The values for Exports and Imports are also shown in US $ Million for the same time period. Here, FII constitute the total flow from FDI and Foreign Institutional Investment.
Table 2: Year wise Value of FII, Exports and Imports

Year	FII (US $ Million)	Exports (US $ Million)	Imports (US $ Million)
2005-06	16,261	1,03,091	1,49,166
2006-07	14,640	1,26,414	1,85,735
2007-08	43,325	1,62,904	2,51,439
2008-09	8,311	185,295	3,036,96
2009-10	50,361	1,78,751	2,88,373
2010-11	41597	251,136	369,769
2011-12	39177	304,624	489,417
2012-13	46710	300,400.70	490,736.70
2013-14	26385	314,415.70	450,213.60
2014-15	73562	310,338.50	448,033.40
2015-16	31891	262,290.10	381,006.60
2016-17	43224	276,547.00	382,740.90
2017-18	52401	303,526.20	465,581.00
2018-19	30094	330,078.00	514,078.00
2019-20	44417	313,361.00	474,709.00

Source: Handbook of Statistics on Indian Economy of respective years, rbi.org.in
I. Analysis for Model a, where FII is independent variable and Exports is dependent variable
The following Table 3 to Table 6 presents the findings related to Model a showing impact of FII on Exports.

Table 3: Descriptive Statistics

	Mean	Std. Deviation	N
Exports	248211.4800	76120.20923	15
Foreign Investment Flows	37490.4000	16780.93837	15

 Table 4: Correlations

		Exports	Foreign Investment Inflows
Pearson Correlation	Exports	1.000	.512
	Foreign Investment Inflows	.512	1.000
Sig. (1-tailed)	Exports	.	.026
	Foreign Investment Inflows	.026	.
N	Exports	15	15
	Foreign Investment Inflows	15	15

Table 5: Model Summaryb Model R R Square Adjusted R Square Std. Error of the Estimate Change Statistics Durbin-Watson R Square Change F Change df1 df2 Sig. F Change 1 .512a .262 .205 67853.97616 .262 4.619 1 13 .051 1.064 a. Predictors: (Constant), Foreign Investment Inflows

b. Dependent Variable: Exports

Table 6: Coefficientsa Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) 161138.842 44140.728   3.651 .003 Foreign Investment Inflows 2.323 1.081 .512 2.149 .051

a. Dependent Variable: Exports

Correlation model: Relation between Foreign Investment Inflows (FII) with Exports is 0.512; which shows that these two variables are having partial positive relation.
Regression model: Table-4 presents the model summary showing the relationship between the model and the dependent variable. Here, R is the multiple correlation coefficients and shows a linear correlation between the observed and predicted values. In this model, the value of R is .512 and large value signals a strong relationship. R square which is coefficient of determination shows the level of variation for Exports. So, the results of Model a, shows that R-squared value of 0.262, which means as much as 26.2% variation in exports is explained by Foreign Investment inflows only. The Durbin –Waston static explains about the independent errors that it is tenable or not. This is considered that if its value is closer to 2, then it is better. But here its value is 1.064, which is not closer to 2. In this model F-statistic is not found significant, as p value is .051 which is more than 0.05, so Null hypothesis accepted and concluded that FII has not significant impact on Exports.
II. Analysis for Model b, where FII is independent variable and Import is dependent variable
The following Table 7 to Table 10 presents the findings related to Model a showing impact of FII on Imports.
Table 7: Descriptive Statistics

	Mean	Std. Deviation	N
Imports	376312.9467	116417.42930	15
Foreign Investment Flows	37490.4000	16780.93837	15

Table 8: Correlations

		Imports	Foreign Investment Flows
Pearson Correlation	Imports	1.000	.491
	Foreign Investment Flows	.491	1.000
Sig. (1-tailed)	Imports	.	.032
	Foreign Investment Flows	.032	.
N	Imports	15	15
	Foreign Investment Flows	15	15

Table 9: Model Summary^b

Model R R Square Adjusted R Square Std. Error of the Estimate Change Statistics Durbin-Watson R Square Change F Change df1 df2 Sig. F Change 1 .491a .241 .183 105256.88876 .241 4.126 1 13 .063 1.020 a. Predictors: (Constant), Foreign Investment Flows

b. Dependent Variable: Imports

Table 10: Coefficients^a

Model		Unstandardized Coefficients		Standardized Coefficients	t	Sig.
		B	Std. Error	Beta
1	(Constant)	248648.613	68472.269		3.631	.003
	Foreign Investment Flows	3.405	1.676	.491	2.031	.063

a. Dependent Variable: Imports

Correlation model: Relation between Foreign Investment Inflows (FII) with Imports is 0.491; which shows that these two variables are having low correlation.
Regression model: Table-8 presents the model summary showing the relationship between the model and the dependent variable Imports. In this model, the value of R is .491 and if the value is large then it will signals a strong relationship. R square which is coefficient of determination shows that model explains 0.241 level of variation for Imports. The Durbin –Waston static explains about the independent errors that it is tenable or not. This is considered that if its value is closer to 2, then it is better. But here its value is 1.020, which is not closer to 2. In this model F-statistic is not found significant, as p value is .063 which is more than 0.05, so Null hypothesis accepted and concluded that FII has no significant impact on Imports.

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