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This paper examines the long-run relationship between foreign direct investment (FDI) and gross output, and export and labor productivity in the Indian economy on the sectoral level by using the annual data from 1990-1991 to 2000-2001.The study uses a panel co-integration test, the results of which demonstrate that the flow of FDI into economic sectors has helped to raise the output, labor productivity and export in some sectors, but a better role of FDI at the sectoral level is still expected.