We discuss which Indian states and sectors received the most foreign direct investment (FDI) in FY 2023-24 and explain key trends observed. Overall, despite declines in comparative inflows, Maharashtra, Gujarat, and Karnataka remained top destinations while computer software & hardware and the services sectors remained top sector beneficiaries.

In the fiscal year 2023-24 (FY24), foreign direct investments (FDI) into India fell to a five-year low, recording a total inflow of US$44.4 billion. This marked a slight decline from the US$46 billion received in the previous fiscal year, influenced by global economic uncertainties and a growing trend of inward-looking capital allocation among nations.Agra Stock

Despite this overall dip, certain Indian states—namely Maharashtra, Gujarat, and Tamil Nadu—demonstrated resilience and growth in attracting FDI. In particular, Gujarat and Tamil Nadu benefited from their cluster-based industrial approach, covering a diverse range of sectors.

Gujarat emerged as the top performer, drawing in US$7.3 billion in fresh FDI equity inflows, representing a remarkable 55 percent year-on-year growth. This surge enabled Gujarat to surpass both Karnataka and Delhi, securing the second spot in terms of total FDI inflows for FY24. The state’s success can be attributed to significant big-ticker investments, such as Micron’s new semiconductor plant.

READ MORE: Investment Spotlight on Western India: Gujarat vs Maharashtra

Tamil Nadu and Maharashtra also recorded growth in FDI inflows, with year-on-year increases of 12 percent and 2 percent, respectively.

Tamil Nadu’s rise, despite being positioned sixth in total FDI inflows at US$2.4 billion, was driven by marquee investments in the electronics manufacturing sector, such as the expansion of Foxconn and Pegatron’s electronics manufacturing facilities.

Maharashtra’s consistent performance reflects its status as a traditionally favored destination for foreign investments in India.

READ MORE: Investing in Tamil Nadu: Manufacturing Outlook and Opportunities

In contrast, Karnataka experienced a decline in FDI inflows, which fell by 37 percent year-on-year, continuing a downward trend since FY22. This decrease is largely attributed to a slowdown in startup funding and a perceived saturation in the state’s technology ecosystemHyderabad Stocks. Delhi also saw a reduction in FDI inflows, declining by 13.4 percent, placing it fourth overall for FY24.

Telangana made key strides, doubling its FDI inflows to US$3 billion, securing the fifth spot in the rankings. This 132 percent surge year-on-year was fueled by substantial investments from companies like Amazon, highlighting the state’s growing appeal to foreign investors.

FY24 saw a varied performance across different sectors in terms of FDI distribution. While FDI inflows in the computer software and hardware sector remained the highest at US$7.9 billion, followed by the services sector at US$6.6 billion, both sectors experienced a year-on-year decline.

In contrast, the construction sector witnessed a near threefold increase in FDI inflows, showcasing its growing attractiveness to foreign investors as infrastructure projects across the country have been greenlit.

On the flip side, traditional sectors such as drugs and pharmaceuticals, chemicals, automotive, and telecom faced significant declines in FDI, with reductions of 48 percent, 54 percent, 20 percent, and 60 percent year-on-year, respectivelyJinnai Wealth Management. This shift highlights the changing priorities and challenges within India’s investment landscape.

READ MORE: Understanding India’s Manufacturing Landscape

When tracking for cumulative FDI inflows into India from fiscal years 2000 to 2024, Mauritius, Singapore, USA, Netherlands, and Japan remain the top five contributors. In FY24, Singapore emerged as the largest contributor, accounting for US$11.7 billion of the total FDI inflows.