2. long run aggregate supply will shift outwards

3. Aggregate demand will also shift outwards as investment is a component of aggregate demand

4. It may give domestic producers an incentive to become more efficient

6. FDI will be make the host country lost the control over domestic policy.

7. Certain foreign policies are adopted that are not appreciated by the workers of the recipient country

8. Another disadvantage of foreign direct investment is that there is a chance that a company may lose out on its ownership to an overseas company.

9. Local market is affected badly

10. If there is a lot of FDI into one industry e.g. the automotive industry then a country can become too dependent on it and it may turn into a risk that is why countries like the Czech Republic are "seeking to attract high value-added Problems of Foreign Capital or why .Too services such as research and development (e.g.) biotechnology)" Why India Gets Limited FDI<br />Image and Attitude: There is a perception among investors that foreign businesses are still treated with suspicion and distrust in India.<br />Domestic Policy: While the FDI policy is quite straightforward and getting increasingly liberalized for most sectors, once an investor establishes his presence, “national” treatment means that this investor is subject to domestic regulations, which are perceived as being excessive.<br />Procedures. Although approval for investment is given quite readily, actual setting up requires a long series of further approvals from central, state and local authorities. This introduces substantial implementation lags.<br /> Quality of infrastructure. Foreign investors are concerned about a number of problems with the infrastructure sector – in particular, electricity and transport. Irregular and undependable supply complicates problems for foreign investors.<br />State government level obstacles. This issue is tied up with one of the most pressing agenda items for reform. At the level of actual investment the practices of state (and often lower levels) governments become important. There is widespread agreement among most observers that state government practices in issues such as land records, utility (power, water etc.) connections, providing clearances of various sorts may make an important difference in the time it takes to get a plant up and running. Differences in state practices in such matters partly explain the disproportionate flow of FDI to some states in the peninsular region of India. In addition, there are some fiscal barriers to unimpeded flow of goods and services within the country, although the level of such barriers has come down in recent times.<br />Delays in legal process. Despite a highly structured legal system, dispute settlement and contract enforcement are time consuming activities in India. Such apprehensions deter the rapid flow of foreign investment. <br />Conclusion <br />FDI provides India with stability in inflow of funds, access to international markets, export growth, transfer of technology and skills and improves balance of payments. <br />More FDI does not necessarily guarantee high growth rates. The relative emphasis must shift from a broad (scatter shot) approach to one of targeting specific companies in specific sectors. Socially responsible FDI should be encouraged through the development of national and international investment guidelines and regulations. <br />FDI is beneficial to India’s growth and India’s growth is beneficial for FDI. India needs to create a talent pool suitable for the investors and it needs to develop infrastructure that will encourage the investors. These steps taken by India to bring FDI will also help India to grow on its own. FDI if monitored and nurtured in such a way that it will bring more skills and resources to India will be mutually beneficial.<br />