How much tax do I have to pay?
This would be treated as Gift and taxed accordingly to the tax bracket.
Is there any way to show it as foreign investment?
What do you mean by this? There is no such thing. Do not mix it up with investments by Companies for various purposes
Can I include my friend's(Not Indian) name as an investor in legal documents?
Which legal documents?
Apart from this, how are you planning to send back the funds to your funds? Rupee is not convertible on capital account. It maybe quite a bit of time to move the funds out and depends on regulation.
Edit To respond to OP's comment
Create a company and have your friend as a partner. Consult a CA as well as a Lawyer as there are several rules and regulations in place that must be followed.