Nearly 82 per cent of all FDI equity inflows into India went to just six states or Union territories — Maharashtra, Delhi, Karnataka, Gujarat, Tamil Nadu, and Andhra Pradesh (including Telangana) — from January 2000 to March 2026.

However, there have been huge fluctuations in recent years. Net FDI inflows into India reached a peak of nearly $44 billion in FY21, up from just $3.27 billion in FY01, a jump of 1245.56 per cent. After that, it declined consistently for four years, plunging to nearly $1 billion in FY25. It then rose to around $7 billion the next year.

Among sectors, services had the highest share at 16.37 per cent in gross FDI equity inflows from January 2000 to December 2025, followed by computer software and hardware (15.62 per cent) and trading (6.55 per cent). Financial services accounted for the largest share within the services sector.

Delhi topped the charts from January 2000 to March 2006, accounting for 24.69 per cent of total FDI equity inflows. Maharashtra has been the leader since then, topping the charts almost every year and finishing with a share of over 30 per cent for the entire period from January 2000 to March 2026. Delhi came second with a share of 17.39 per cent. Karnataka and Gujarat’s share increased after the pandemic as Delhi’s share declined.

Karnataka received the highest FDI worth $4.03 billion from Robert Bosch Internationale of Switzerland for manufacturing motor vehicle engines. In Gujarat, the investments were led by Google International LLC, which brought in $4.58 billion in FDI equity through Jio Platforms Limited for IT and computer services. In Tamil Nadu, Brilliance Technologies from the US pumped in FDI inflows worth $0.5 billion for office administrative services.

At the outset, it seems that the states lacking reforms and performing poorly in the ease of doing business rankings received less FDI.

However, states such as Maharashtra, Delhi, Karnataka and Tamil Nadu fared poorly in the Ease of Doing Business (EoDB) rankings released by the government in different years over the past decade.

For instance, Delhi and Tamil Nadu featured outside the top 10 in 2015, 2016, 2017 and 2019, while Maharashtra and Karnataka’s best performance in these four years was the eighth rank. Andhra Pradesh was the best-performing state in the EoDB rankings in three out of four years, while being the runner-up in one of those years.

On the other hand, states like Madhya Pradesh, Chhattisgarh, Jharkhand, Rajasthan and Telangana had relatively better rankings but considerably lower FDI inflows to boot. This trend continues, even though the EoDB rankings are now given in the form of categories such as ‘top achiever’, which is the top rung, followed by ‘achiever’, ‘fast movers’ and ‘aspirers’. 

Maharashtra and Delhi — the top two in terms of FDI — remain in the ‘aspirer’ category under the Business Reform Action Plan (BRAP) ranking of states based on business-centric reforms. None of the top FDI receiving states was in the top two categories in the latest ranking of 2024.

Experts say EoDB and BRAP rankings are not the prime reason behind FDI inflows. Instead inflows reflect states’ infrastructure, access to ports, prosperity and presence of industrial networks.

Biswajit Dhar, distinguished professor at think tank Council for Social Development, says EoDB and BRAP are more political in nature and non-transparent. “FDI comes to the states where infrastructure is good, markets are strong and have access to ports.”

For instance, Maharashtra has logistical convenience as well as access to ports, he points out. Though Delhi does not have ports, it has good logistical connectivity and high per capita income, providing markets for investors.

Bank of Baroda chief economist Madan Sabnavis considers EoDB a nudge. “EoDB can only give a nudge, but the main driving factors are opportunity and presence of industry,” he emphasises.

FDI inflows in finance go to Maharashtra and Gujarat and technology sectors to the southern states. States that are not heavily industrialised and do not have robust financial infrastructure would not get FDI, Sabnavis adds.