Maharashtra Leads FDI Inflows in India in Q1 of FY2024-25

Foreign direct investment (FDI) equity inflow in India has seen a surge during the April-June period of the financial year 2024-25, primarily driven by heightened inflows in sectors such as services, computers, telecommunications, and pharmaceuticals, according to government data.

Among Indian states, Maharashtra led the FDI inflows in the first quarter of FY2024-25. 

India’s foreign direct investment (FDI) numbers have seen a significant rise in the current financial year, with cumulative FDI equity inflow between April and June, FY2024-25, recorded at US$16.178 billion, up by 48 percent from the same period last year, where the total figure stood at US$10.94 billion. 

As per the Department for Promotion of Industry and Internal Trade (DPIIT), the latest FDI data also revealed a rise in FDI inflows in May and June, with US$5.85 billion and US$5.41 billion, respectively, up from US$2.67 billion and US$3.16 billion in the previous financial year 2023-24.

FDI in key sectors and major global investors

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Total FDI, encompassing equity, reinvested earnings, and other capital, rose by 28 percent to US$22.49 billion in the first quarter, up from US$17.56 billion in the same period of 2023-24. However, in April, FDI inflows in the country slightly decreased to US$4.91 billion compared to US$5.1 billion in April 2023.

In terms of sector-wise performance, FDI into the services, computer software and hardware, telecommunications, pharmaceuticals, and chemicals sectors has increased.

Source: Fact sheet on foreign direct investment (FDI) inflow, DPIIT, GoI

** Services sector includes financial, banking, insurance, non-financial/ Business, outsourcing, R&D, courier, technical testing and analysis, and others. 

Major countries contributing to increased FDI equity inflows included Mauritius, Singapore, the US, the Netherlands, the UAE, the Cayman Islands, and Cyprus. However, FDI inflows from countries such as Japan, the UK, and Germany have declined.

Top states preferred for FDI in India

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Among Indian states, Maharashtra led the FDI inflows in the first quarter of FY2024-25, followed by Karnataka, Telangana, and Gujarat. For the second consecutive year, Maharashtra has emerged as the top recipient of FDI in the country, securing INR 707.95 billion (US$8.48 billion) in the ongoing financial year.

Source: Fact sheet on foreign direct investment (FDI) inflow, DPIIT, GoI

The sum represents 52.46 percent of the country’s total FDI during the period, according to data from the Department for Promotion of Industry and Internal Trade (DPIIT).

Trailing Maharashtra is India’s southern state of Karnataka, which secured INR 190.59 billion (US$2.28 billion) in FDI, with other states such as Delhi, Telangana, and Gujarat following further behind.

Indian states encouraged to modernize policies to attract foreign investments

India’s Prime Minister Narendra Modi has reportedly urged state governments to align their policies with global standards and prioritize single-point strategies to retain investors. He emphasized the need for states to establish land banks and implement necessary reforms to address land-related challenges.

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While India is actively engaging with various countries to stimulate investment, it awaits reforms in land and building regulations, which are seen as critical to reducing business costs and promoting job creation. Efforts to modernize land records and introduce property cards are also aimed at minimizing litigation.

In a bid to foster competition among states for foreign investment, India intends to promote improvements in access, regulatory frameworks, and infrastructure, including power and law enforcement. These efforts will likely be incorporated into an “investment-friendly charter” under development by Niti Aayog, with states’ performance monitored and ranked. More details on implementation of these proposed reforms are, however, still awaited.

(US$1 = INR 83.93)

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