Foreign Direct Investment is when a company or investor puts money into a business in another country — not just buying stocks, but establishing real operations or significant ownership (usually 10%+). Toyota building a factory in India, Walmart acquiring Flipkart, or Samsung opening a semiconductor plant in Vietnam — these are all FDI.
Global FDI flows reached $1.37 trillion in 2023. The US attracts the most FDI, followed by China, the UK, and India. India received $71 billion in FDI in 2022-23 — top sectors include IT, telecom, automobiles, and pharmaceuticals. Singapore, Mauritius, and the US are the largest FDI sources into India.
FDI is considered more stable than portfolio investment (stocks and bonds) because it involves long-term commitment — you cannot shut down a factory overnight like you can sell stocks. Countries compete aggressively for FDI through tax incentives, special economic zones, and relaxed regulations. India's "Make in India" initiative specifically targets manufacturing FDI.