Karnataka FDI Inflows Surge to $12.94 Billion in 2025-26, Retaining Second Spot

Karnataka has retained its position as India's second-largest recipient of Foreign Direct Investment (FDI) equity inflows for the fourth consecutive year, with inflows surging to USD 12.94 billion in 2025-26. The state's performance was driven primarily by Bengaluru's dominance in information technology, software, startups, and innovation-led industries, according to data tabled in Parliament by Minister of State for Finance Pankaj Chaudhary.

The latest figures mark a 95.5% jump from the USD 6.62 billion recorded in 2024-25, representing the highest annual FDI inflow the state has attracted during the four-year period between 2022-23 and 2025-26. Maharashtra retained the top spot nationally with USD 18.42 billion in FDI equity inflows. Karnataka secured the second position comfortably ahead of Delhi (USD 6.18 billion), Gujarat (USD 5.71 billion), and Tamil Nadu (USD 4.72 billion).

The state's FDI trajectory over recent years reflects a rebound following a period of slower investment. In 2022-23, Karnataka attracted USD 10.43 billion before inflows dropped to USD 6.57 billion in 2023-24 amid global economic headwinds. Inflows remained flat at USD 6.62 billion in 2024-25 before the sharp recovery in 2025-26 reversed the two-year slowdown.

At the national level, FDI trends showed a mixed performance. Net FDI inflows into India rose to USD 6.95 billion in 2025-26, recovering from USD 0.96 billion in 2024-25, but remained significantly below the USD 27.99 billion recorded in 2022-23. The subdued net numbers have been largely attributed to rising capital repatriation and disinvestments by foreign investors, which grew from USD 29.35 billion in 2022-23 to USD 54.04 billion in 2025-26.

Across sectors, Computer Software and Hardware drew the highest FDI equity inflows across India in 2025-26 at USD 13.95 billion. The Services sector followed with USD 10.01 billion, while Non-Conventional Energy drew USD 3.02 billion, Food Processing Industries attracted USD 3.01 billion, Construction Infrastructure received USD 2.57 billion, and the Automobile Industry registered USD 2.46 billion.