Tamil Nadu emerged as India’s leading destination for FDI equity inflows in the first quarter of FY27 with the State more than doubling FDI.
Official data shows that Tamil Nadu attracted $5.9 billion in FDI equity inflow in April-June 2026, accounting for 30 per cent of India’s total FDI equity inflows during the quarter.
This is more than double from the $2.7 billion FDI that the State welcomed in Q1 of FY26.
Karnataka’s share of India’s FDI dropped from 31 per cent in Q1FY26 to 11 per cent in Q1FY27.
Overall, FDI grew 6 per cent y-o-y in the quarter from $18.6 billion in Q1FY26 to $19.8 billion in Q1FY27.
Tamil Nadu emerged as India’s leading destination for FDI equity inflows in the first quarter of FY27 with the State more than doubling FDI.
Official data shows that Tamil Nadu attracted $5.9 billion in FDI equity inflow in April-June 2026, accounting for 30 per cent of India’s total FDI equity inflows during the quarter. This is more than double from the $2.7 billion FDI that the State welcomed in Q1 of FY26.
TN’s jump can be largely attributed to the landmark large FDI inflow into TN-registered Shriram Finance from Japanese major MUFG. Analysts, however, add the growth is also indicative of TN’s ability to attract both manufacturing and GCC investments.
GCC investments
For instance, in the current quarter (July-September), the industrialised State has already recorded two major GCC investments from the US including pharma major Walgreens and coffee giant Starbucks.
In contrast, traditional FDI leaders Karnataka and Maharashtra saw a steep year-on-year decline of 63 per cent and 21 per cent respectively, while FDI into Gujarat rose just 8 per cent. Karnataka’s share of India’s FDI dropped from 31 per cent in Q1FY26 to 11 per cent in Q1FY27.
Maharashtra remains a major destination but lost ground, reducing its share from 29 per cent to 21 per cent. The quarter thus led to a reordering of the toppers as TN typically features in the third or fourth position.
Services sector, which includes financial, banking, insurance, business, outsourcing, R&D and other services more than doubled FDI from $3.3 billion in Q1FY26 to $7 billion in Q1FY27. While this includes the Shriram-MUFG deal, analysts also attribute this to momentum in new GCC units in the country.
Dr Gaurav S Ghosh, associate partner at Grant Thornton Bharat, says Tamil Nadu’s FDI jump is significant even though it is largely explained by a single transaction. “The structural momentum in the state’s investments is seen in the last few years,” he said. On the decline in other top States, he notes a high base effect in case of Karnataka, and a broader reversion to trend in Maharashtra.
Overall, FDI grew 6 per cent y-o-y in the quarter from $18.6 billion in Q1FY26 to $19.8 billion in Q1FY27.
Analysts, however, caution that quarterly data can be typically lumpy.
Published on September 26, 2026
