Maharashtra is FDI 'raja', Gujarat next in line

Gujarat is maha close to being India’s number one destination for foreign direct investment; the state attracted the largest FDI share in 2008-09 after Maharashtra, says an Associated Chamber of Commerce and Industry of India (Assocham) report.

The study — Annual FDI Report (2008-09), Assocham Eco Pulse (AEP) — concludes that with the world’s large economies facing recession and other financial crises, not only Gujarat but India as a whole has emerged as a safe destination for investors.

India witnessed 11% growth in FDI inflow in 2008-09 to around $27,273.50 million compared to $24,570.72 million in 2007-08.

In the same period, the FDI inflow in Gujarat surged up by 57% from $1,799.87 million in 2007-08 to $2,825.80 million in 2008-09.
According to the study, Maharashtra, Gujarat, Karnataka, New Delhi, Tamil Nadu and Andhra Pradesh are the top six states, which together attracted 81% of total FDI during 2008-09.

Maharashtra attracted the maximum inflow of foreign investment in FY ‘09 because of better infrastructure facilities. “But Gujarat, with its aggressive marketing of investor-friendly policies and fast developing infrastructure became the second preferred state in terms of foreign investment,” said chamber president Sajjan Jindal while releasing the report. “The state received 10.35% of the total FDI inflow in India during FY 2008-09 and registered an impressive growth rate of 57%.”

Global meltdown, in fact, helped India prove the soundness of its economy. “For foreign investors, India has become more competitive and high-return option,” said an advisor to Crisil, Sunil Parekh. “At the time the world was reeling from recession in 2008-09, only a few countries, including India, witnessed only a slowdown. Hence, it has become a right investment destination.”

The FDI inflow into Maharashtra has to be high because Mumbai is the financial capital of India, Parekh said.  “In many cases, companies set up industries in Gujarat but the investment goes to Maharashtra’s kitty as their corporate offices are in Mumbai,” he said.

Analysing the FDI pattern, economist YK Alagh said, “The country received the major part of the FDI before Sept  2008. The period between October and December was very bad for investments.”