INTRODUCTION

Unprecedented globalizations have witnessed double digit economic growth resulting in fierce competition and accelerated pace of innovation. As a result inflow of Foreign Direct investments has become a striking measure of economic development in both developed and developing countries.
FDI and FII thus have become instruments of international economic integration and stimulation. Fast growing economies like Singapore, China, Korea etc have registered incredible growth at onset of FDI. Though US captures most of the FDI inflows, developing countries still account for significant growth of FDI and rise in FII. FDI not only gives access to foreign capital but also provides domestic counties with cutting edge technology, desired skill sets, tools of innovation and other complementary skills. Apart from helping in creating additional economic activity and generating employment, foreign investment also facilitates flow of sophisticated technology into the country and helps the industry to march into advanced technology.

A favorable business environment fostered Indian economy after 1991, when the government of India opened the door for foreign capital in the way of direct investment and through foreign institutional investors. The policies drafted to stimulate the flow of foreign capital in to India provided much needed impetus for India to emerge as an attractive destination for foreign investors. Consequently, the international capital inflows have been increased tremendously during last two decades.

What is Foreign Direct Investment?

Any investment that flows from one country into another is known as foreign investment. Inflow of investment from other countries is encouraged since it complements and stimulates domestic investments in capital-scarce economies of developing countries. Since 1991 Foreign investments in the country