_____________________________________________________________________________________________________ *Corresponding author: Email: vsk76_tn@rediffmail.com; Asian Basic and Applied Research Journal 4(2): 95-102, 2021; Article no.ABAARJ.525 An Analysis of Foreign Direct Investment in India Velu Suresh Kumar 1* 1 PG & Research Department of Economics, H.H. The Rajah’s College (Autonomous B+), Pudukkottai - 622 001, Tamil Nadu, India. Author’s contribution The sole author designed, analysed, interpreted and prepared the manuscript. Received 09 August 2021 Accepted 18 October 2021 Published 21 October 2021 ABSTRACT Capital flows have become a prerequisite for speeding the pace of growth and development of a developing country, and practically all developing countries have been working hard to attract additional capital flows. Furthermore, these countries have correctly recognised that entrusting a significant role to the private sector has become a necessity. Capital flows to developing countries began to pick up steam in the early 1980s, and by the end of the decade, there had been a massive rise in the amount of capital flows to these countries. Though the Indian government has traditionally welcomed foreign investment with certain constraints, the government's foreign investment policy has experienced significant changes since independence. According to the Department for Promotion of Industries and Internal (DPIIT), FDI into India reached $81.7 billion in 2020-21. Meanwhile, according to the World Investment Report 2021, India was the world's fifth-largest FDI receiver in 2020, with inbound FDI up 27 per cent from the previous year, largely due to ICT investments. This research is based on secondary sources. In light of this, the study examines India's existing FDI policy regime and attempts to analyse the trend of FDI inflows from 2000 to 2021, with a focus on country and sector-specific analyses. Thus this study concludes that the Government of India's recent revisions to the FDI policy framework in 2017 have aided in the removal of numerous layers of obstacles for international investors. The reforms in the FDI policy regime indicate that the Indian government would continue to liberalise the FDI regime in the years ahead. Keywords: Economic policy; Foreign direct investment; gross domestic investment; service sector; RBI. 1. INTRODUCTION Economic development requires the availability of natural resources such as land and water, appropriate savings and their conversion into investments, a skilled labour force and entrepreneurship, technological expertise, and so on. A developing economy may have minimal savings, an inexperienced workforce, limited entrepreneurship, and a lack of technical understanding to harness natural resources for economic development. The majority of Original Research Article