Chennai: The industrial corridor in the south garners over 30 per cent of Foreign Direct Investment coming into India.
Karnataka-Tamil Nadu-Andhra Pradesh-Telangana industrial corridor in the South accounted for 30.3 per cent of FDI that came into the country between October 2019 and March 2024, though these states had 26 per cent share of the total GSDP of all states in FY23.
Maharashtra-Gujarat corridor in the West had the largest proportion of 49.5 per cent of FDI inflow. These two states had just 22.1 per cent share of all states GSDP in FY23.
The NCR region, including Delhi and Haryana grabbed 17.8 per cent of FDI despite having just 7.4 per cent of GSDP, finds India Ratings.
The proportion of FDI inflows to the three corridors during October 2019 – March 2024 was 94.6 per cent of the total FDI inflows and proportion of these eight states in the total GSDP of states in FY23 was 55.5 per cent. Eastern India, despite having more mineral wealth, has been lagging in attracting FDI so far. Only Jharkhand (1.1 per cent) and West Bengal (0.7 per cent) were able to attract some FDI in the Eastern region.
“Concentration of FDI in few states suggests that better infrastructure (physical and human) and growth potential are key preconditions to attract higher FDI. The states which have evolved their economic policies around the broader national-level economic policies are able to take advantage and attract higher FDI inflows and thus there are better growth prospects for these state economies”, said Devendra Kumar Pant, Chief Economist, India Ratings and Research.
The highest FDI continues to flow in the services sector, followed by manufacturing (excluding computer hardware). The proportion of FDI inflows to the services sector increased to 40.9 per cent during FY15-FY24 from 37 per cent during FY01-FY14. Among services, the top three sectors attracting FDI were banking/insurance, trading, and telecommunications.
Within services, FDI has majorly flowed in sectors such as trading, telecommunications, banking/insurance, IT/business outsourcing, and hotels/tourism. Within manufacturing, it has remained concentrated in segments such as automobiles, chemicals, drugs and pharmaceuticals, metallurgical, electrical equipment, and food processing.
