The Karnataka government, led by Deputy Chief Minister DK Shivakumar, recorded the fastest growth in foreign direct investment (FDI) inflows when compared with other Indian states. According to the government figures, Karnataka received a record amount of foreign direct investment equity inflows ($12.94 billion) in FY26, which is almost double compared to the previous fiscal year ($6.5 billion). A rapid rise can be attributed to increased investments in technologies and rapid growth in the establishment of Global Capability Centres (GCC) in Bengaluru.
Breakdown of states’ Foreign Direct Investment inflows
Although Maharashtra saw a slight reduction in foreign investments after two years of impressive growth, it managed to keep its status as India’s leading receiver of foreign money.
Sectoral performance: Growth in food processing, decline in air transport
The Parliamentary Report made note of the major industrial sector reallocation that occurred in India during FY26:
Highly performing sectors
- Food processing industry: Saw the highest growth of nearly 600 per cent to reach $3 billion.
- Automobile industry: Registered strong foreign equity inflows amounting to $2.5 billion.
- Drugs & pharmaceuticals: Registered steady performance and showed $1.9 billion of foreign equity inflows.
- Education: Saw marked expansion to reach $1.3 billion.
Sectors with reduced investment
Air transport: Saw a marked decline in investment, with foreign equity flows reducing almost 70 per cent to $383 million.
Electronics manufacturing: Registered a slowdown in investment, with foreign equity flows reducing to almost half at $1.1 billion.
Shift to technology corridors & UTs’ share
The above data indicated that there is a shift happening in India in terms of industrial performance, with institutional investors now focusing on technology and service investments into Karnataka, whereas manufacturing and heavy industry investments continue in Maharashtra and Gujarat.
Union Territories, along with “Others,” accounted for $6.37 billion (10.82 per cent) of total FDI equity flows in India for the FY period.
