Maharashtra, Karnataka account for 51% of FDI in India in FY25: Government

As per data from the Department for Promotion of Industry and Internal Trade (DPIIT), India’s gross Foreign Direct Investment (FDI) inflows rose by 14% to USD 81.04 billion in FY 2024–25, marking the highest inflows in the past three years. However, net FDI fell drastically by 96% to USD 0.4 billion, reflecting higher repatriation and rising outward FDI by Indian companies.

Key Facts:

• Gross FDI inflows (2024–25): USD 81.04 billion (up from USD 71.3 billion in 2023–24)
• Net FDI inflows: USD 0.4 billion (down from USD 10.1 billion in 2023–24)
• Top recipient sectors:
  • Services – 19% (USD 9.35 billion, +40.77%)
  • Computer software & hardware – 16%
  • Trading – 8%
  • Manufacturing – USD 19.04 billion (+18%)
• Top contributing countries:
  • Singapore (30%), Mauritius (17%), USA (11%), UAE showed fastest growth (+50%)
• Top states receiving FDI:
  1. Maharashtra – 39% (USD 19.6 billion)
  2. Karnataka – 13% (USD 6.62 billion)
  3. Delhi – 12% (USD 6 billion)
  4. Gujarat – 7% (USD 5.7 billion)
  5. Tamil Nadu – 5% (USD 3.68 billion)

Analysis:

• FDI Distribution: Maharashtra and Karnataka together accounted for 51% of India’s total FDI inflows, attributed mainly to improved infrastructure, logistics, and policy stability.
• Sectoral Trends: The services sector continues to dominate, while manufacturing FDI has seen consistent growth—aligned with Make in India and PLI schemes.
• Outward FDI Surge: Indian companies invested USD 29 billion abroad, a 75% increase—suggesting growing global ambitions of Indian firms but also raising questions about domestic investment sentiment.
• Repatriation Effect: Repatriation and disinvestment rose 16% to USD 51.5 billion, leading to a record fall in net FDI inflows.

Government Measures & Policy Context:

• Since 2014, India has attracted USD 748.78 billion in FDI — 143% higher than the previous 11-year period (2003–14).
• Liberalization measures include:
  • 100% FDI under automatic route in defence, insurance intermediaries, coal mining, and contract manufacturing.
  • Proposal to raise FDI cap in insurance to 100% (Budget 2025).
• Reforms under “Ease of Doing Business”, PM Gati Shakti, and National Infrastructure Pipeline (NIP) have improved investor confidence.

Challenges:

• Despite strong gross inflows, the fall in net FDIsignals:
  • Rising profit repatriation by foreign investors.
  • Domestic investment hesitancy by Indian companies.
  • Limited reinvestment of earnings within India.
• The trend could indicate structural constraints in domestic investment climate — such as land, labour, and capital market reforms.

Way Forward:

• Strengthen ease of doing business and factor market reforms.
• Encourage reinvestment of profits by providing fiscal incentives.
• Promote balanced regional FDI dispersal beyond a few states.
• Enhance policy predictability and reduce compliance burdens.
  
  Updated -  June 08, 2025 11:24 pm | The Hindu , DD News & The Print