Trends and Patterns of Foreign Direct Investment Inflows in Karnataka

Abstract

Since the New Economic Policy in India, Foreign Direct Investment (FDI) has received more attention at both national and state levels. According to the World Investment Report (2021) published by UNCTAD, India is one of the top investment destinations and ranks 7th place in receiving FDI inflows. While attracting inflows from all the regions, Karnataka garners a larger share among the total FDI inflows in India. This paper examines the trends and patterns of Foreign Direct Investment (FDI) inflows in the state of Karnataka in the past decade (2012-13 to 2021-22) with emphasis on investment promotion policies, comparative performance among the top five states of India, cumulative inflows from abroad and challenges for the state to further strengthen the inflows. It is hypnotized that FDI has a positive impact on Per Capita Net State Domestic Product (NSDP) and infrastructure development in the state. The multi-regression analysis is used as a statistical tool. Data compiled from DPIIT and Annual Economic survey reports of the Government of Karnataka. The empirical evidence shows that Karnataka has gained prominence in FDI share especially IT/ITes sector has lured about 30 percent of total FDI inflows in the state.