Mr.Dikit S.V., Dr. Shringarpure. A.A

ABSTRACT

In developing and underdeveloped countries Foreign Direct Investment plays a vital role. The need of Foreign Direct Investment in these nations arises due to low level of savings and income in order to meet the needed level of investment required to sustain the growth of the economy. In other words we can say that FDI serves as a link between savings and investment. India’s savings and investment peaked at 36.8% and 38.1% of GDP, respectively, in FY08. In FY13, the overall savings rate dropped to 30.1% of GDP and investment to 34.8% of GDP.The main reason behind this is a fall in savings due to high inflation in India.It has widened the saving-investment gap. So there is aneed of external capital.