How Tamil Nadu overtook Maharashtra and Karnataka in FDI inflows | The Federal

Tamil Nadu Leads FDI Inflows

Tamil Nadu ranked first in India for FDI equity inflows in the July–September quarter, attracting $5.95 billion, or about 30% of the national total. This was more than twice the state’s inflow in the same quarter a year earlier.

Rank State or territory FDI equity inflows 1 Tamil Nadu $5.95 billion 2 Maharashtra $4.22 billion 3 Delhi $2.67 billion 4 Karnataka $2.11 billion 5 Gujarat $1.30 billion

Key Drivers

A major contributor was a $4.4 billion investment by Japan’s MUFG for a 20% stake in Shriram Finance. Because the company is registered in Chennai, the investment was counted in Tamil Nadu’s total.

The analysis cautions that this was an unusually large, potentially one-off deal. It also points to investment in global capability centres (GCCs), including projects from Walgreens and Starbucks.

Comparison with Other Major Destinations

Tamil Nadu’s lead came as inflows weakened in other major destinations:

• Karnataka’s FDI fell by 63%, and its share of national inflows dropped from 31% to 11%.
• Maharashtra’s inflows declined by 21%, with its share falling from 29% to 21%.

Maharashtra and Karnataka had led the annual rankings in recent years.

Political Context

The commentary says the Shriram Finance deal was secured before the new TVK government took office. An unnamed contributor described Tamil Nadu’s investment appeal as the result of sustained efforts and strengths such as its skilled engineering workforce.

The contributor also pointed to investments announced during the new government’s first 100 days and an EY GCC memorandum of understanding associated with the Chief Minister’s UK visit.

Outlook

It remains uncertain whether Tamil Nadu can sustain its lead. Future performance will depend on continued infrastructure investment, diversification beyond financial services, international promotion, faster clearances and land availability.

The report also identifies social infrastructure as an area needing attention. Autos, electric vehicles, electronics, aerospace and shipbuilding are among the sectors that could support further growth.

The quarter’s figures alone, the report concludes, do not establish a lasting shift.

Presenters and Contributors

• Presenter: Not identified in the subtitles.
• Contributor: An unnamed Southern India Chamber representative, described as its president.