Foreign direct investment FDI is a strategic instrument of development policy in India. It is envisaged to play an important role in the long-term economic development of the country by augmenting availability of capital, enhancing competitiveness of the domestic economy through transfer of technology, strengthening infrastructure, raising productivity, generating new employment opportunities and boosting exports. Since the economic liberalisation policy initiated in 1991, the Government of India has taken several measures to encourage FDI in almost all sectors of the economy. However, the emphasis has been on inflows in the development of infrastructure and technological upgradation of industry. With a vast reservoir of skilled and cost-effective manpower, India is now recognized as one of the most attractive investment destinations by reputed international rating organisations. Under the current policy regime, there are three broad entry options for foreign direct investors a in a fe