The country that this essay will use as a case study is India. India is interesting because the country has become FDI-intensive in recent years, following economic liberalization in the early 1990s. Prior to this, the Indian economy had stringent controls and regulations on foreign capital and foreign ownership. Foreign direct investment (FDI) has been particularly targeted in these reforms in order to benefit from the inflow of capital and other resources such as technology and knowledge. Since the liberalization of FDI policy, India has seen a massive increase in FDI inflows (see Figure 1). The services sector and the software and hardware sector received the largest share of FDI inflows, followed by the telecommunications, transportation, fuel and chemical sectors (Figure 2). The main concept discussed in this essay is foreign direct investment. According to the OECD, foreign direct investment is “a category of cross-border investments made by a person resident in an economy (the direct investor) with the aim of establishing a lasting interest in an enterprise (the direct investment firm ) resident in an economy other than that of the direct investor”. Companies invest in foreign economies in order to exploit their particular advantages, and foreign direct investment is the preferred process, compared to licensing, agreements and exports. Advantages that companies often possess are patented technology, managerial capabilities, marketing capabilities, and brand names. The other concepts discussed are linkages and spillovers. Spillovers can be defined as the effects that occur when the production function of producers is influenced not only by their market activities but also by the activities of other economic agents. Links are one way you flip…half the paper…evidence. Since the FDI and industrial policy reforms of the 1990s, market-seeking factors have played an important role in attracting FDI, such as market size and growth, as well as economic stability. Furthermore, as India's debt-to-GDP ratio declines, more investments are expected. At a later stage, after industrial policy reforms, India started attracting efficiency-focused FDI through language resources and low-cost capital. Infrastructure is an important factor in attracting foreign direct investment, but its quality varies from state to state. Capitalizing on these FDI through linkages and spillovers has also been an important topic in the investment literature in India. A common point in studies of spillovers in Indian industry is that technology transfer and foreign direct investment spillovers are highly dependent on the absorptive capacity of domestic firms, particularly research and development efforts..