Abstract

India made use of foreign investment after attaining independence in order to promote economic expansion and strengthen its balance of payments. It takes several forms, such as foreign investments, commercial borrowings and foreign aid. The level of total investment is increased and is complemented by FDI. It facilitates the efficient use of natural resources and enhances managerial and entrepreneurial skills. Market interest rates, which are higher than those for concessional loans classified as foreign aid are paid to foreign banks for commercial borrowings. From Rs. 897,744 crores in 2013-14 to Rs. 1,816,834 crores in 2022-23, the total amount of commercial borrowings has grown consistently, indicating a strong expansion in borrowing activity. India's foreign aid receipts have fluctuated significantly, peaking in 2020-21 with concessional loans. Over the years, FDI inflows have typically increased; the largest influx, of Rs. 396,955 crores, was reported in 2019-20. India's economic growth, industrialization, infrastructural development and general standard of living have all been greatly aided by foreign investment.