Foreign direct investment (FDI) refers to direct investment by a company in a foreign country either by acquiring a company or expanding existing operations. FDI allows companies to take advantage of cheaper wages, tax incentives, and tariff-free access to foreign markets. The key advantages of FDI for India include job creation, technology and equipment transfers, and increased competition. However, FDI also presents some disadvantages like potential political influence from foreign companies, inflation, corruption, and threats to small Indian retailers. The document outlines FDI limits in various sectors in India such as defense, insurance, telecom, and petroleum.