India's popularity among foreign investors has grown over the recent years. According to the index prepared by the United Nations Conference on Trade and Development (Unctad), India's position in inward Foreign Direct Investment (FDI) has improved from 121 in 2005 to 113 in 2006. This is the highest annual jump recorded by India , on the index which started in 1982. India has also improved its position in the outward flow of FDI from 65 in 2005 to 56 in 2006.

As against the growth recorded by India, China's rank slipped from 76 in 2005 to 69 in 2006. However, in terms of value, China with FDI inflows of $69.46 billion in 2006 was far ahead of India’s FDI figure of $16.88 billion in 2006.

India is expected to remain as one of the favourite investment destinations of foreign investors, atlaest for the next couple of years. According to a report by Economist Intelligence Unit, compiled in co-operation with Columbia Programme on International Investment (CPII), India is expected to receive FDI worth $20.4 billion, every year, during 2007-11. The report estimates that, China, would attract around $86.8 billion of FDI during the same period.

On the domestic front, the Union government is soon expected to take a decision on FDI in insurance and commodity broking. The Foreign Investment Promotion Board (FIPB) has already started gathering views of the financial services’ department and the consumer affairs department, regards this issue.

Recent developments indicate the intentions of the Union government to raise FDI levels within oil & petroleum marketing and in a few civil aviation services. FDI upto 100 per cent is expected to be allowed in oil and petroleum marketing companies. At present, if a foreign company sets up an oil marketing company, it is required to divest 26 per cent in favour of an Indian partner, within five years. The upper limit of FDI is expected to be raised from the existing 49 per cent to 74 per cent, in helicopter services, non-scheduled aircrafts and regional airlines.

In October 2007, the Union Ministry of Finance cleared a total of 27 FDI proposals worth Rs.1,650 crore. On 03 October 2007, the Ministry cleared 13 FDI proposals worth Rs.393.36 crore, including Maruti Udyog's proposed JV with Japanese Futaba Industrial and Rural Electrification Corp's proposed public offer.

Maruti Udyog’s proposed JV with Futaba Industrial has been approved with foreign equity of up to 51 per cent, amounting to Rs.45.9 crore.

Other important proposals cleared by the Ministry include induction of foreign equity worth Rs.232.58 crore (72.5 per cent) by Secunderabad-based Aster Infrastructure offering telecom services, and Hyderabad-based KVK Energy's proposal to bring in 70 per cent foreign equity worth Rs.97 crore, to invest in downstream operating companies.

On 17 October 2007, the Ministry cleared another 14 proposals involving FDI worth Rs.1,257 crore. Of the 14, the major ones were of the Mauritius-based Essar Telecom Holdings and of US-based Goldman Sachs Asset Management (GSAM). The two companies plan to bring in FDI worth Rs.500 crore and Rs.200 crore, respectively.

Greenko Mauritius’ Rs.480 crore investment proposal to convert its Balaji Biomass Power into an operating-cum-holding firm, for downstream investments in power projects, was another proposal cleared by the Ministry.