Foreign Portfolio Investment (FPI) is investment by non-residents in Indian securities including shares, government bonds, corporate bonds, convertible securities, infrastructure securities etc. It is argued that the most important benefits from FPI is that it gives an upward thrust to the domestic stock market prices. FPI along with FDI can contribute to fill the savings investment gap and provide the foreign exchange to support growth and development. India‘s change of policy in relation to FPI, led to large surge of foreign investment in capital market. It revolutionized not only the capital market of the country but also its whole economy. The research paper focuses on the flow of FPI and FDI in India and in particular the impact of FPI on certain economic indicators of India. Regression analysis has been used for capturing the relationship between FPI and selected economic indicators of India.