Foreign institutional investments (FII) have emerged as a significant force in shaping the trajectory of emerging economics, particularly India. This paper explores the multifaceted impact of FIIs on the Indian economy, focusing on aspects such as capital market volatility, currency valuation, economic growth, and investor confidence. The study also draws a conceptual parallel with financial literacy, emphasizing how informed financial decision-making at both institutional and individual levels can mitigate the adverse effect of volatile foreign capital flows. Leveraging insights from a bibliometrics analysis of literature spanning 2010 to 2024, the paper identifies key patterns in academic discourse, highlighting the intersection of financial literacy, investor behavior, and macroeconomic outcomes. The findings suggest that enhanced financial literacy among domestic investors and policymakers can foster a more resilient financial ecosystem, capable of absorbing and adapting to FIIinduced fluctuations. The paper concludes by advocating for policy interventions that promote financial education and transparency to ensure sustainable economic development in the face of increasing globalization and foreign capital mobility.