India's FDI policy aims to attract foreign capital and technology to supplement domestic resources and accelerate economic growth.

The services sector, particularly the information technology (IT) and business process outsourcing (BPO) industries, has consistently attracted the highest FDI inflows into India.

FDI contributes to economic growth by creating employment opportunities, introducing new technology and innovation, and improving the balance of payments.

The Department of Industrial Policy and Promotion (DIPP) under the Ministry of Commerce and Industry is the nodal agency responsible for regulating FDI in India.

The automatic route in FDI permits foreign investors to invest in specified sectors without seeking prior approval from the government, subject to certain conditions.

The defense sector in India is reserved for domestic investment only and does not allow FDI to ensure national security and strategic autonomy.

FDI typically improves the balance of payments by bringing in foreign exchange inflows in the form of equity investments, reinvested earnings, and technology transfer fees.

FDI in India faces challenges such as inadequate infrastructure, a complex regulatory environment, skill gaps in the workforce, and sometimes resistance from domestic industries.

FDI contributes to technology transfer in India by bringing in new technologies and know-how, helping in upgrading existing technologies, and promoting research and development (R&D) activities.

FDI contributes to promoting exports from India by providing access to foreign markets, helping in improving product quality and competitiveness, and facilitating technology transfer.

FDI contributes to employment generation in India by creating direct employment opportunities in foreign-invested enterprises, indirect employment opportunities in supporting industries, and leading to skill development and employability.

FDI plays a crucial role in infrastructure development in India by providing financial resources, bringing in new technologies and expertise, and improving the efficiency and quality of infrastructure services.

FDI can contribute to sustainable development in India by promoting the adoption of environmentally friendly technologies, supporting social development initiatives, and encouraging responsible business practices.

The Indian government has taken several initiatives to attract FDI, including relaxation of FDI norms in various sectors, establishment of special economic zones (SEZs), and implementation of the 'Make in India' campaign.

FDI contributes to the overall economic competitiveness of India by enhancing productivity and efficiency, promoting innovation and technological advancement, and improving the quality of goods and services.