Asian countries, especially China and India have a commanding lead in attracting more FDIs compared to other Latin American countries. There is a continuous reduction in the gap between the FDI flow in developed and developing countries globally. Compared to India, China is having an edge over India in attracting more FDI. A study report by UNCTAD expects a rise in the FDI flow to India if the government continues with the economic reforms with a commitment to attract more FDI. This article presents an assessment on the FDI flow to China and India.

Developing countries, emerging economies and countries in transition increasingly view Foreign Direct Investment (FDI) as a source of economic development and modernization, income growth and employment. Countries are on a spree to relax rules and regulations in order to attract more foreign direct investment. FDI is the investment made in physical assets by a domestic investor in a foreign country, solely guided by the long term prospects of making profits by exercising the managerial control over the investment. While portfolio investment is made by the investor in financial assets often motivated by short-term profit considerations, FDI is a long-term investment. Developing countries evince interest to tap FDI to promote economic growth.

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