Foreign Investment flows capital across borders for productive assets. Foreign Direct Investment (FDI): Ownership stake (>10%), management control, long-term commitment; greenfield (new projects) or M&A (acquisition); generates employment, technology transfer, tax revenue; home country loses jobs (short-term), gains export growth (long-term). Portfolio Investment: Financial assets (stocks, bonds), <10% stakes, liquid, volatile; short-term focus, subject to sudden reversals (sudden stops), destabilizing during crises. Mergers and Acquisitions: Ownership transfer, not new investment; rapid entry, use existing infrastructure. Push factors (host country): Market size, growth potential, resource availability, labor costs, geographic location, policy incentives. Pull factors (home country): Developed market saturation, cost reduction opportunities, currency movements, economic conditions. Effects on host country: Positive (technology, employment, growth), Negative (profit repatriation, inequality, dominance). Regulation: Investment promotion (incentives, infrastructure), Investment protection (contracts, dispute resolution), Restrictions (security concerns, sector limits). Indian context: FDI inflows increasing (IT, automobile, retail, infrastructure); restrictions in defense, multi-brand retail; startup ecosystem attracting tech FDI. ICAI focus: FDI vs. portfolio distinction, effects, policy. Exam tip: FDI is long-term and real (productive assets); portfolio is short-term and financial (securities). FDI creates employment, portfolio doesn't.