Vol. 3, Issue 5, Part E (2017)

Foreign Direct Investment (FDI) has been established as a most helpful international capital to the host country compared to portfolio investment that has short term characteristics. FDI plays a very important role in the development of the nation. FDI is an investment made by a company or individual in one country in business interests in another country, in the form of either establishing business operations or acquiring business assets in the other country, such as ownership or controlling interest in a foreign economy. FDI are distinguished from portfolio investment in which an investor merely purchases equities of foreign – based companies. However, the fact that FDI does not bring quick returns to any economy cannot be denied. In India, FDI is considered as a development tool, which helps in achieving self-reliance in various sectors and in overall development of the economy. To attract various FDI, Government of India needs to increase the investment climate for foreign capital through the maintenance of political as well as economic stability along with constraint of corruption