FDI Trend Overview (2015–2025)
- FDI concentration remains high in India — top 5 States account for 75–90% of all FDI inflows.
- Significant reallocation of investor preference among these states over the last decade.
Relevance : GS 3(FDI)
Declining Share of Delhi
- 2015–16: Delhi had the highest FDI share at 32% (~$12.7 billion).
- 2024–25: Fell drastically to 12% (~$6 billion).
- Indicates relative loss of investor confidence, possibly due to slower infrastructure growth or policy uncertainties.
Maharashtra’s Rise as FDI Magnet
- 2015–16: Accounted for 24% (~$9.5 billion) of FDI.
- 2024–25: Rose to 39% (~$19.6 billion), becoming the top FDI destination.
- Driven by:
- Mumbai’s financial ecosystem.
- Strong industrial base and logistics infrastructure.
- Policy stability and “predictable returns.”
Karnataka’s Consistent Performance
- In top 5 for 9 of 10 years.
- Share increased from 10% (2015–16) to 13% (2024–25).
- Anchored by Bengaluru’s tech and innovation ecosystem.
Gujarat’s Steady Improvement
- Share grew from 6% to 11% over the decade.
- Benefited from:
- Industrial corridor development.
- Investor-friendly policies.
- Strategic focus on manufacturing and exports.
Tamil Nadu’s Decline
- FDI share dropped from 11% to 7% (2015–25).
- Yet, remained in the top 5 for 7 out of 10 years.
- Suggests relative stagnation compared to faster-growing states.
Expert Insight: “Flight to Quality”
- Investors are more risk-averse amid global uncertainty.
- Shift toward mature, low-risk ecosystems with:
- World-class infrastructure.
- Proven policy frameworks.
- Stable regulatory environments.
- Maharashtra and Karnataka exemplify these “safe havens” for capital.
Implications for India
- Widening regional disparity in FDI inflows.
- Need for Delhi and other lagging states to:
- Improve ease of doing business.
- Enhance infrastructure and governance.
- Create sector-specific investment policies.
