Abstract: FDI plays a vital role for economic development of any developing country. The importance of FDI in India has increased significantly over the last two decades. FDI serves as a link between investment and saving. Many developing countries like India, are facing the deficit of savings. This problem can be solved with the help of Foreign Direct Investment. Foreign investment helps in reducing the defect of BOP and provides the base and pre requisite for rapid GDP growth. This study is entirely based on the secondary data. This paper makes an in-depth study to analyse the scenario of FDI and its impact on Indian economy. For this purpose empirical data are estimated for the period 1991 to 2014. For this purpose we use some useful statistical tools like correlation and linear regression analysis. For data analysis SPSS software has been used. And we conclude that there is significant effect of FDI on India’s GDP.