CONTEXT

• India is actively promoting itself as an attractive FDI destination through policy reforms and ease of doing business.
• The recent data from DPIIT reveals state-wise performance, highlighting regional disparities and competitiveness in attracting foreign capital.

CONCEPT

• FDI Definition: Investment from a foreign entity into the business or assets of a domestic company, often involving management control or ownership.
• Components of FDI:
  • Equity inflows
  • Reinvested earnings
  • Other capital
• Importance of FDI:
  • Boosts capital formation and technology transfer
  • Generates employment
  • Enhances infrastructure and export competitiveness

CURRENT

• FDI Inflows in FY25:
  • Total FDI grew 14% over the previous year
  • Reached the highest level in the last three years
• Top State Recipients:
  •  Maharashtra: $19.6 billion (31% of total FDI)
  •  Karnataka: $6.62 billion
  • Combined, these two states account for 51% of India’s total FDI
• Other Major States:
  • Delhi – $6 billion
  • Gujarat – $5.71 billion
  • Tamil Nadu – $3.68 billion
  • Haryana – $3.14 billion
  • Telangana – $3 billion
• Key Reason: Rapid infrastructure development and investor-friendly policies in Maharashtra and Karnataka
• Expert Opinion: Strong physical and digital infrastructure is a major pull factor for foreign investors
• Comparative Figure: FDI stood at $71.3 billion in 2023-24; current FY marks a clear upward trend