Foreign investment inflows in India have been rising since the introduction of economic reforms in early ‘90s. Foreign investments enter India broadly in two forms namely, Direct Investments and Portfolio Investments. Direct investments come by way of equity, reinvested capital and inter company debt transactions of FDI companies. On the other hand, investments through Global Depository Receipts/American Depository Receipts and Foreign Institutional Investors account for a major chunk of portfolio investments. With India adopting investor-friendly policies, foreign investments are expected to play a crucial role in the economic development of the country.