This paper is divided into two sections. The first section deals with the Foreign Direct Investment (FDI). It gives a brief overview of the dependencia theories of the 1960s and the OS response to them. This is followed by a brief on IMF Fund Adjustment Program which is viewed as unilateral pressure in favour of the MNCs. The changes in the flow of FDI and the changing theories explaining the behavior of MNCs are discussed. Section II deals with India's new economic policy, its implications and the direction of change. This is followed by a discussion on the expectations of policy makers and the likely response from MNCs