Foreign direct investment plays a key role in developing nations' economic development. Enhancing foreign economic transactions has become more critical than trade. There are a variety of questions for multinational corporations (MNCs) to address if they plan to invest in other countries, such as why do they invest? How are investments made? Where can I spend it? And how big of an opportunity is that? However in the earlier theories of foreign direct investment, certain questions were dealt with. FDI theories were graded according to microeconomic and macroeconomic viewpoints. An attempt has been made in this paper to research key FDI theories and the relationship between the restrictive index of FDI and FDI is studied by the model of bivariate regression. In India, FDI inflows demonstrate a substantial relationship with the FDI restrictive index. It will have to become more liberal to draw more FDI governments.