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We have carried out detailed study of the microstructure of InN epitaxial layers using high resolution XRD measurements. The type of dislocations and their generation for different growth parameters (in this case: V/III) ratio) has been analyzed. We find that the InN layers that have been deposited at low V/III ratio have a large density of edge and mixed dislocations. At high V/III ratios of greater than 18,700, there is an increase in the density of screw dislocations. The minimum density of edge and screw dislocation density is seen at a V/III ratio of 18,700. Photoluminescence and Hall mobility measurements confirm that enhanced quality of InN layers deposited at a V/III ratio of 18,700. Determination of "c' and "a" values of a large number of InN layers has revealed that the layers are predominantly under compressive hydrostatic strain which is attributed to the presence of nitrogen vacancies.