Gujarat sees 42% increase in FDI inflows, maintains strong investment attractiveness

Gandhinagar, September 4 (KNN) Gujarat continues to strengthen its position as a preferred destination for Foreign Direct Investment (FDI) in India, according to a latest report by the Department for Promotion of Industry and Internal Trade (DPIIT).

The state recorded FDI inflows of Rs 8,508 crore in the first quarter of fiscal 2025, a significant 42 per cent year-on-year growth from Rs 5,993 crore recorded in the first quarter of fiscal 2024.

Despite this growth, Gujarat’s position in absolute FDI inflows has shifted to fifth in the country. The state now lags behind Maharashtra, Karnataka, Delhi and Telangana in FDI numbers in Q1 FY25.

However, the cumulative FDI inflows into Gujarat since October 2019 remain impressive, reaching Rs 3.08 lakh crore. This places the state third in India, after Maharashtra and Karnataka.

The state has seen steady growth, with foreign direct investment (FDI) inflows increasing by 25 per cent between June 30, 2023 and June 30, 2024, and by 35 per cent over the two-year period.

Industry experts attribute Gujarat’s investment appeal to several factors. The state has adopted a policy-driven approach with clear incentives for new investments, which has been instrumental in attracting foreign capital.

Additionally, Gujarat has placed emphasis on improving its social infrastructure, which is expected to make it an attractive destination for both businesses and workers.

A key strategy that has paid dividends is Gujarat’s approach to cluster-based development, which has allowed the creation of dedicated industrial estates that serve specific sectors, supporting an ecosystem of primary manufacturers and ancillary industries.

Good connections with ports, facilitating import and export, also played an important role in the attractiveness of the state for investors.

Pathik Patwari, chairman of the ICC Gujarat board, highlighted the success of Gujarat’s cluster-based approach, citing the growth of the automobile industry following a significant investment by Tata Motors.

He noted that the strategy has also attracted foreign companies in sectors such as semiconductors, logistics and green energy.

Patwari further highlighted the advantages of this state, including ready-made plug-and-play infrastructure across various industrial clusters.

He also emphasised the importance of peaceful industrial relations in Gujarat and availability of labour, which helped create a stable and attractive environment for foreign investors.

The combination of these factors – political support, infrastructure development, strategic industrial planning and a favourable business climate – has allowed Gujarat to maintain a strong position in attracting foreign direct investment.

As Gujarat continues to evolve in terms of investment, economists and industry observers will be closely watching to see whether the state maintains, and potentially improves, its position in India’s foreign direct investment (FDI) rankings.

(KNN Office)