Context: The doubling of Foreign Direct Investment (FDI) inflows into Information Technology (IT) sector in the first half of FY26 (H1FY26) helped the southern States of Karnataka and Tamil Nadu raise their share in total FDI even as Maharashtra and Gujarat saw their shares shrink.
- FDI into India stood at $35.2 billion in H1FY26 (April-September 2025), up 18% from $29.8 billion in the same period last fiscal, official data show.
- The FDI growth was driven by a two fold jump in inflow into the IT sector (categorised as ‘Computer Software & Hardware’) to $9 billion in H1FY26. With this, the sector’s share rose up to 25% of the total FDI flow compared with 14% in the prior period.
Still in pole position
- Maharashtra, still at the top position, saw a reduction in share of total FDI in H1FY26 to 30% vs. 45% ($10.6 billion). Gujarat’s share halved to 6.4% while Karnataka with $9.4 billion and Tamil Nadu with $3.6 billion were at second and third spot in overall tally.
- FDI into e-commerce majors Meesho and Flipkart, from foreign promoter entities and investors, dominated the top deals. Large PE investments in Access Healthcare Services and Haldiram Snacks and investments by Ardour Investment Holdings in Adani Green Energy were also among the top deals. A $0.8 billion FDI into Raiden Infotech, a subsidiary of Google, for data centre business was another key FDI during this period.
- Madhavi Arora, chief economist, Emkay Global; the change in FDI shares of States was a function of India receiving more services FDI compared with manufacturing. GCCs and new-age technology firms were concentrated in the Southern states, especially Karnataka.
- Sectorally, the “Services” sector (which is said to include other services besides technology) and ‘non-conventional’ energy saw a decline in the FDI inflows in this half year.
- In terms of origin, Singapore led the way with a significant $12 billion invested accounting for 34% of the total FDI.
- The U.S. and Mauritius followed with $6.6 and $3.5 billion respectively.
Sources: The Hindu