Top 10 Indian States and UTs with the highest Foreign Direct Investment (FDI)

Know about the top 10 Indian states and UTs with the highest FDI (foreign direct investment) and the government initiatives driving the sector

By Forbes India

Published: Aug 18, 2025 03:00:29 PM IST

Updated: Aug 18, 2025 03:08:00 PM IST

One of the defining factors in India’s economic trajectory is the foreign direct investment. From manufacturing hubs to digital infrastructure, many global investors are showing confidence and long-term growth plans in the Indian market. Some states and union territories have managed to attract a significantly larger share of this inflow into services, software, trading, and manufacturing.

According to a PIB press release, India recorded more than $81 billion in foreign direct investment in FY 2024-25, indicating a 14 percent jump from the previous year. That’s more than double the inflow seen a decade ago.

In this post, we’ll discuss the top 10 Indian states and UTs with the highest FDI, to give you a clearer picture of where the money is moving and why. If you’re an investor, policymaker, or just curious about India’s economic map, this data will give you real insights into the foreign direct investments.

What is an FDI?

Foreign direct investment is when a company or investor from one country invests money directly into a business or asset in another country. It’s usually about taking a controlling stake, enough to influence how the business is run.

FDI can look like setting up a new factory, buying a large stake in a local company, or forming a joint venture. The idea is long-term involvement, not just short-term profit. For example, one of the major FDI deals in India was Google’s $4.5 billion investment in Reliance Jio Platforms in 2020.

Along with the needed capital, in India, it opens up new job opportunities, advances in technology, and improved business practices.

Top 10 Indian states and UTs with the highest FDI

FDI growth is often a sign of global confidence in a country’s economic future. Here’s the latest data for the top 10 Indian states and union territories with the highest FDI:

Sr.no.	Top 10 Indian states	FDI (in $ million)
1	Maharashtra	19,589
2	Karnataka	6,619
3	Gujarat	5,711
4	Delhi	6,091
5	Tamil Nadu	3,681
6	Haryana	3,147
7	Telangana	2,994
8	Uttar Pradesh	436
9	Rajasthan	374
10	Jharkhand	7

How do FDIs work?

Investing in India through foreign direct investment happens in two ways: the automatic route and the government route.

In an automatic route, foreign investors do not require prior government approval, meaning they can invest directly by partnering with Indian companies, setting up subsidiaries, or establishing new businesses. Sectors like manufacturing, services, telecom, and retail usually fall under this category.

For sectors such as defence, media, or mining, investments must go through the government route, which involves approval from the relevant ministry.

Investors can bring in capital by subscribing to the Memorandum of Association (MoA), private placements, mergers or demergers, share purchases, rights or bonus issues, or even swapping capital instruments and convertible notes.

The Reserve Bank of India (RBI) and the Department for Promotion of Industry and Internal Trade (DPIIT) track and regulate the flow and compliance.

What are the different types of foreign direct investment?

Foreign direct investments can be grouped into four categories based on the investor’s intent and the business relationship between the parent company:

Horizontal FDI: It involves a company expanding its existing business operations into a foreign country without changing the nature of its core products or services.
Vertical FDI: In this type, a company invests in a foreign country to strengthen or control different stages of its supply chain, either by acquiring suppliers or reliable distributors.
Conglomerate FDI: This is when a company invests in a business located in another country that operates in a completely different industry from its own.
Platform FDI: This refers to setting up operations in one country to export goods or services from there to other countries, rather than serving the domestic market.

In India, some of the top contributors are from the USA, Japan, Mauritius, Singapore, and the Netherlands, each playing a major role in driving the foreign direct investment growth.

Government initiatives to support the FDI ecosystem

The Indian Government has introduced many policy initiatives and reforms to keep the momentum going:

The Union Budget 2025-26 raised the FDI cap in the insurance sector from 74 percent to 100 percent, making it easier for global players to enter and scale in India.
The Jan Vishwas 2.0 aims to simplify business laws and reduce compliance burdens to create a more predictable investment environment for foreign investors.
India signed a Bilateral Investment Treaty with the UAE to boost investor confidence and drive more investments into manufacturing and exports, to align with the ‘Atmanirbhar Bharat’ vision.
The Foreign Investment Facilitation Portal (FIFP) acts as a single window for investors submitting proposals for FDI that need government approval, making the process faster and more transparent.
Reforms like the National Technical Textiles, PM MITRA Parks, and the Silk Samagra-2 scheme aim to strengthen manufacturing, scale up infrastructure, and encourage global investments in the textile sector.

Pros and cons of FDI

Like any other financial sector, foreign direct investments are associated with several pros and cons.

Pros of FDI

It attracts global investors to Indian markets, creating more jobs and enhancing skill sets.
It enhances domestic infrastructure and industries with much-needed capital.
It opens the door to advanced technologies and international business practices.

Cons of FDI

Smaller, local businesses often struggle to keep up with large international firms.
A large portion of the profits made in India is sent back to the investor’s country.
Over time, excessive external influence could limit India’s influence over its own core sectors.

Despite these challenges, India remains a preferred investment hub, and the numbers continue to grow.