This paper examine the impact of governance indicators on FDI inflow in India. Multiple regression Models were applied to the data taken for the period of 1996-2012. VIF test shows no perfect multicollinearity. Empirical results proved that governance indicators have significant impact on FDI inflow in India which indicates that good governance attract foreign investors and enhance FDI inflow in India. This paper recommended that government of India should improve governance which can attract more foreign investors and can help achieve full employment, enhance growth and can raise per capita income.

Keywords: Governance Determinants, Foreign Direct Investment, Regression analysis, Pearson correlation