India launched a series of progressive economic liberalization policies to overcome the structural defects that had caused the economic crisis in 1991. With these policy changes, foreign direct investment (FDI) into India has increased rapidly since 1992. This paper examines the characteristics of spatial distribution of the FDI and analyzes its implications for the Indian urban system. The paper includes the following findings: 1 )FDI into India after the economic liberalization has been concentrated in the eight largest metropolitan areas: Delhi, Mumbai, Chennai, Bangalore, Hyderabad, Kolkata, Pune, and Ahmadabad. In particular, the bulk of the FDI has gone to Delhi and Mumbai. 2 )Mumbai is the largest city in terms of agglomeration of domestic major companies. However, Mumbai is inferior to Delhi in terms of the amount of FDI received. This trend was repeatedly recognized in the distribution of FDI from the major investing countries. This finding indicates that Delhi has increasingly elevated its status in the hierarchy of economic centers due to the increase of FDI. That is, Delhi seems to have increased its centrality in economic activities in addition to being the national center of political and administrative activities. 3 )In South India, Bangalore is generally viewed as the second economic center after Chennai. However, Bangalore already receives as much FDI as Chennai. Like Delhi, Bangalore has elevated its status in the Indian urban system due to FDI. 4 )The Kolkata metropolitan area has the second largest population after Mumbai. However, the amount of FDI in Kolkata is smaller than in Hyderabad whose population is less than half that of Kolkata. This finding indicates that Kolkata has decreased its status in the hierarchy of economic centers due to the distribution of FDI in the country. 5 )We conducted questionnaire surveys for Japanese and American-affiliated companies in order to examine factors influencing the location of the companies. Five factors were recognized as the main impor