The northern and eastern regions are fast emerging as the preferred destination for foreign investors. While traditionally strong destinations such as Maharashtra, Karnataka and Tamil Nadu have shown a decline in FDI inflows, regions like Delhi-NCR, West Bengal, Rajasthan, Punjab, Haryana and Himachal Pradesh have shown steady increase in receipts in the last three years.
Six states – Maharashtra, Karnataka, Tamil Nadu, Gujarat, Andhra Pradesh, and Kerala, that are among top 10 destinations for FDI inflows in the country, have either shown a continuous decline during the last three years or at least once in three years according a government report.
Delhi-NCR has emerged as the top destination in the country with $8.27 billion FDI received in the first 9 months of this fiscal, leaving behind Maharashtra which has traditionally been the biggest FDI recipient in the country. While Maharashtra received $8.02 billion FDI receipts to slip to the second position, Karnataka slipped to third position as its FDI receipts declined from a high of $8.57 billion in 2017-18 to $ 4.74 billion in first three quarters of this fiscal.
Emergence of Delhi-NCR as a top FDI destination country is important as it has shown a steady rise in the last three years. It received $5.88 billion FDI in FY 2016-17 but the next year it registered a spike of over 30% to reach the figure of $7.65 billion. In fact, in the first 9 months of this fiscal, Delhi-NCR has received more FDI than it has received during the entire 12 month period of previous fiscal, which is pegged at $8.27 billion, an increase of 8%.
Similarly, West Bengal, Sikkim and Andaman & Nicobar islands have shown steady increase in FDI inflows, from $50 million in 2016-17 to $218 million in 2017-18, a jump of over 4 times. The next year it jumped by over 5 times to reach the figure of $1.17 billion, showing a clear confidence of investors.
Another shining example of FDI success story are Punjab, Haryana, Himachal Pradesh and UT Chandigarh, which have shown similar steady rise in FDI inflows going up from $6 million in 2016-17 to $108 million in 2017-18 and $596 million in first 9 months of this fiscal.
In comparison with these northern and eastern states, top southern and western states including Maharashtra, Gujarat, Tamil Nadu, Karnataka, Andhra Pradesh and Kerala have registered decline at least once during last three years.
Maharashtra which used to be the top destination for FDI inflows in the country has registered a sharp decline between 2016-17 to 2018-19. FDI inflows to Maharashtra declined by nearly 32%, from $19.65 billion in 2016-17 to $13.42 billion in 2017-18. It again showed a decline to come down to the figure of $8.02 billion for the first 9 months of 2018-19.
Similarly, Karnataka which is the third largest FDI destination within the country has registered a decline in the current fiscal year after jumping by over 4 times in the previous year. Karnataka received $2.13 billion in 2016-17, then it jumped by over 4 times to $8.57 billion in 2017-18 but it registered a sharp decline in the first 9 months of this fiscal to come down to just $4.74 billion.
Same thing happened with three other top destinations for FDI in the country – Tamil Nadu, Gujarat and Andhra Pradesh which registered a decline in FDI inflows in at least once during the three year period.
According to a report by Department of Industrial Policy and Promotion, in the first 9 months of this fiscal, top ten FDI destinations are in the country are: Delhi-NCR ($8.27 billion), Maharashtra ($8.02 billion), Karnataka ($4.74 billion), Tamil Nadu & Pudduchery ($2.05 billion), Andhra Pradesh ($2.86 billion), Gujarat ($1.68 billion), West Bengal and Sikkim ($1.17 billion), Punjab, Haryana, Himachal Pradesh & Chandigarh ($ 596 million), Rajasthan ($268 million), and Kerala ($ 104 million).