The paper aims to analyse the impact of Foreign Direct Investment (FDI) on Indias energy sector and elucidate the policy implications arising from this dynamic relationship. As India strives to meet its growing energy demands and transition towards sustainable and cleaner sources, foreign investments play a pivotal role in shaping the sectors trajectory. The analysis reveals that FDI has been a significant driver of innovation, technology transfer, and capital infusion in the energy sector. However, challenges such as regulatory uncertainties, bureaucratic hurdles, and policy inconsistencies have impeded the full realization of FDIs potential. By examining successful case studies and identifying bottlenecks, the paper proposes strategic policy measures to harness the benefits of FDI more effectively. Policy implications include the need for a stable and transparent regulatory framework, streamlined approval processes, and targeted incentives to attract foreign investors. Additionally, fostering public-private partnerships and encouraging collaboration between domestic and foreign entities are crucial for achieving long-term sustainability and energy security. The study also emphasizes the importance of aligning FDI policies with Indias energy transition goals, such as increasing the share of renewable energy in the overall energy mix. The findings of this research contribute to the on-going discourse on FDI in Indias energy sector and provide policymakers with actionable recommendations to enhance the investment climate. As India endeavours to balance economic growth with environmental sustainability, understanding and optimizing the role of FDI in the energy sector is imperative for achieving a resilient and sustainable energy future.