Wednesday, June 26, 2024

India's FDI Landscape in FY 2023-24: State-wise Insights and Strategic Considerations


In FY 2023-24, India saw foreign direct investment (FDI) inflows fall to a five-year low of $44.4 billion, slightly below the $46 billion received in the previous fiscal year. This decline can be attributed to global economic uncertainties and a shift towards domestic-focused investments.

Top Performing States

Despite the overall decline, several states demonstrated resilience and growth in attracting FDI:

StateFDI Inflows (US$ billion)Year-on-Year ChangeNotable Investments
Gujarat7.3+55%Micron's new semiconductor plant
Maharashtra-+2%Continued strong investment attraction
Tamil Nadu2.4+12%Foxconn and Pegatron expansions
Telangana3.0+132%Significant investments from Amazon

Declining States

Some states experienced a downturn in FDI inflows:

StateFDI Inflows (US$ billion)Year-on-Year ChangeReason
Karnataka--37%Reduced startup funding, tech sector saturation
Delhi--13.4%General reduction in investment

Sector-wise Trends

The sector-wise performance of FDI in FY 2023-24 varied, reflecting changing priorities and economic conditions:

SectorFDI Inflows (US$ billion)Year-on-Year ChangeNotes
Computer Software & Hardware7.9DeclineHighest despite the drop
Services6.6DeclineSecond highest inflow
Construction-Near threefold increaseRising interest due to infrastructure projects
Pharmaceuticals--48%Significant decline
Chemicals--54%Significant decline
Automotive--20%Significant decline
Telecom--60%Significant decline


The fiscal year 2023-24 highlighted a complex and evolving FDI landscape in India. Despite an overall decline in inflows, certain states like Gujarat, Maharashtra, Tamil Nadu, and Telangana showed strong growth and continued to attract significant foreign investments. Meanwhile, states such as Karnataka and Delhi faced notable decreases in FDI.

Sector-wise, the construction industry emerged as a new favorite among foreign investors, indicating a shift towards infrastructure development. Traditional sectors like pharmaceuticals, chemicals, automotive, and telecom experienced significant declines, reflecting changing investment priorities.

Key Takeaways for Decision-Making

  1. Investment Hotspots: Consider Gujarat and Telangana for potential investment opportunities, given their impressive FDI growth.
  2. Sector Opportunities: The construction sector is emerging as a lucrative field due to increased infrastructure projects.
  3. Risk Areas: Be cautious about investing in traditional sectors like pharmaceuticals and chemicals, which have shown significant declines.
  4. Strategic Shifts: Focus on regions and sectors showing resilience and growth to capitalize on evolving trends in India's investment landscape.

Overall, while challenges persist, the resilience of certain states and the dynamism within various sectors underscore India's potential to adapt and attract foreign investments in a fluctuating global economy.