The economies worldwide are competing to attract FDI at the time when there is a wave of environment sustainability in parlance with the UN SDGs 2030. Considering the SDGs all actions are evaluated in terms of environment and activities that lead to environment degradation are discouraged. The present study is an attempt to study the dynamics between FDI Inflows and Environment through the review of the existing literature on FDI and environment degradation which is broadly segregated into Environment Kuznets Curve (EKC), Pollution Haven Hypothesis (PHH), Pollution Halo Hypothesis, the scale-composition-technology effect, financial development and trade openness impact. Also trend analysis highlights increasing FDI inflows worldwide with India also displaying an increase in FDI inflows. However, India also displayed rising CO₂ emissions per capita. Hence, there might be a link between FDI inflows and environment degradation. Also the top 5 Indian states as per FDI inflows were amongst the top states in terms of average No₂, RSPM and So₂ emissions which are a measure of environment degradation.

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Keywords: FDI, Environment Sustainability, Environment Degradation, Financial Development.