Top 10 FDI Cities in India

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HSBC has recently stated in a research that FDI inflows are expected to be diverted from China to ASEAN member countries like India. It is expected that sectors like railway, insurance, freight, banking, and forestry.
However, there are several roadblocks to Indian cities receiving good amounts of foreign direct investment with infrastructural issues like rail and road network. The regulations also need to be relaxed for more international companies to get interested about investing in India.

Other factors like global economic conditions could act in favor of Indian cities. The developed markets are growing slowly and countries like India offer convenient and economic labor. Both these factors can sway the pendulum in their favor.

Top 10 FDI cities in India

The 2012 attractiveness survey done by Ernst & Young 2012 states that the leading cities in India such as Bangalore, New Delhi, Pune, Mumbai, and Chennai draw 42 percent from the investment related projects that come to India from outside the country. They also generate 36 percent of the jobs that are created in India from these projects and account for 28 percent of the aggregate worth of such projects. The other cities in question are also performing creditably as far as foreign direct investment is concerned and taking several steps to spruce up their economy so as to enhance their viability for potential investors.

Bangalore is a global hub especially in the service sector. The areas where it has performed the best are information technology, biotechnology, and engineering. The city offers a couple of policies namely Millennium Biotech Policy and Millennium IT Policy.

Both these plans offer a wide range of benefits for investors thus making it an attractive destination for the tech companies especially. From 2007 onwards the capital of the south Indian state Karnataka has drawn 474 investment centric projects that have generated at least 110,140 jobs.

Other major areas of advantage for the city are its infrastructure, which is of a really good quality and workforce which is competent and well trained.

New Delhi
New Delhi is the leading business destination for companies operating in the service industry especially in information technology and information technology enabled sectors. Consulting is also an important name in this regard. A number of international organizations also prefer to open their branch offices in this city. From 2007 to 2011 it has drawn approximately 305 projects from international companies that have helped in generating at least 34,100 jobs.

The industrial base in Pune is really substantial and the manufacturing sector has already received a number of investments from companies based outside India. The city is also rising in stature when it comes to information technology and software related services. From 2007 to 2011 the city has generated in excess of 70,700 jobs from 248 projects that have come from outside India.

Mumbai is regarded as India's commercial capital. From 2007 to 2011 the city has received 461 projects that have helped create at least 54,900 jobs. Services and manufacturing are the main sectors that have interested the potential investors as far as Mumbai is concerned.

Other important areas are energy, software, transport, and banks and related financial entities. The state government has created several policies for domains like biotechnology, information technology, e-governance, tourism, and infrastructure so that more investors can be attracted. There are several special economic zones in the city as well, which serve a similar purpose.

Within 2007 and 2011 Chennai was able to create 108,708 jobs thanks to 338 investment projects from outside the country. Automotive sector is the major area of strength for Chennai with special concentration in automobiles and making, developing, designing, and testing of railway coaches. The state government has also come up with several policies to make sure it remains an attractive proposition for investors.

Hyderabad remains one of the major destinations for foreign investors in India. It provides the biggest slice of its state's GDP. In 2011 the city garnered INR 700,000 million through revenues as well as 33.33 percent of the aggregate revenue from taxes for the entire state. In the same period its per capita income was INR 44,300. The city, along with its suburbs, also has maximum amount of special economic zones in the entire country.

Kolkata is a major avenue for business as well as finance and commerce with regards to eastern India. It is also the entry point for the northeastern part of the country. From the later half of 2000s Kolkata has seen the establishment of several IT parks and special economic zones that have drawn many foreign investors to Kolkata as well as major software companies.

At present the Kolkata Metropolitan Development Authority, Universal Success Group, and Salim Group are building a satellite township called Kolkata West International City. It is expected to have several IT parks, hospitals, malls, entertainment avenues, and residential areas. KMDA is also involved in building another similar area named Calcutta Riverside in association with Bata India and Riverbank Holdings.
The IT sector in Kolkata has been growing at almost 70 percent which is almost 200 percent of the Indian average. A cable landing station is supposed to be erected in the coastal part of West Bengal and this will further help the city offer better facilities to its information technology sector. This is expected to bring in more FDI to the city.

Ahmedabad is the biggest inland industrial location in the entire country and also the second biggest among the industrial centers in the western part of India, preceded only by Mumbai. It is one of the biggest exporters of jewelry and gems in India and also the largest among denim suppliers in the country.

The mainstay of the city's economy is the textile industry. Its other important components are pharmaceuticals and chemicals. In the last couple of years the information technology sector has been performing well too as is evident from high rankings received from organizations such as Nasscom for areas like business competitiveness.

Factors like Sabarmati Riverfront Development Project and big retail stores have also helped increase the city's real estate valuation.

In 2012 the electricity distribution sector in Nagpur received FDI worth INR 80 crore from an American company named Bessemer. The recipient company is SNDL, which operates across 3 divisions in the city. This investment makes Nagpur the first city in India to have received FDI in the power distribution domain.

The President of Nag Vidarbha Chamber of Commerce, Dipen Agarwal, has stated that Nagpur will be favoring FDI in areas that help develop the city's infrastructure like electricity, roads, and public transport. This has also been praised by Tejinder Singh Renu, the honorary secretary of Vidarbha Taxpayers' Association.

Jaipur offers an amalgamation of both new age and traditional industries. It is renowned for its substantial exports of gold, stone, and diamond jewelry as far as Asia is concerned. The city has also been ranked highly for its performance in the outsourcing sector and companies such as Infosys and Genpact have set up their operations over here.

Other Cities that attract Foreign Investment in India

Following are the other cities that are attractive propositions from an FDI perspective:
  • Chandigarh
  • Shimla
  • Surat
  • Kanpur
  • Gurgaon
  • Dhanbad
  • Indore
  • Ludhiana
  • Coimbatore
  • Varanasi
  • Kochi
  • Vadodara
  • Noida
  • Madurai

Last Updated on 01/15/2013