The present research aims to the impression of foreign direct investment on Indian economic development and growth of the Indian economy. The foreign direct investment has established with more deep rooted and long term impact on the economic growth of India. With the representive of globalisation, developing countries especially in Aisa, a huge progress in FDI inflows have been seen in last two decades. Even though India is a late entrant to the FDI scene compared to other Asian countries, its considerable market possibility and a liberal policy regime have retained its attractiveness as a favorable destination for foreign investors. The objective of this research paper is to examine the effective impact of FDI on the Indian economy, especially after two decades of economic reforms, analyze the global competition for FDI and the challenges to position itself favorably. The paper concludes that while FDI is necessary for the economy, FDI is more important for the economy and is therefore called an "engine of growth".

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Keywords: Foreign Direct Investment, Economic Development and Growth.