Gujarat, Rajasthan Emerge as India's Leading Investment Destinations (2024)

Posted by India Briefing Written by Radhika Gupta Reading Time: 5 minutes

Gujarat and Rajasthan have emerged as two of India’s top states for attracting corporate investments, inviting investments worth INR 3.98 trillion and INR 2.91 trillion, respectively, in FY 2022. While Gujarat gains from its location along the western coast and a 1600 km long coastline, Rajasthan also shares a border with some of India’s most populous states, giving it access to 40 percent of their markets. In this article, we briefly discuss both states’ economic profiles and highlight factors that make them popular investment locations.

Gujarat has surpassed all other Indian states in luring new investments from both domestic and foreign corporations, according to data from the Centre for Monitoring Indian Economy (CMIE). Fresh investments worth INR 3.98 trillion were announced for Gujarat during the financial year (FY) 2022, representing a 273 percent increase over the FY 2021 figure of INR 2.91 trillion.

Rajasthan, on the other hand, emerged as the second most attractive destination for investments in India in FY 2022. Interestingly, the state witnessed the highest rate of growth during the period, soaring by almost 535 percent and attracting new investments worth INR 2.37 trillion.

In this article, we discuss why these two states are the leading investment destinations in India.

What makes Gujarat an ideal destination for investors?

Gujarat is India’s top industrial state in terms of manufacturing capacity, investment opportunities, operational special economic zones. The state provides prospects for many emerging industries including renewable energy and financial services, as well as investment-friendly places for industrial setup, infrastructure for logistics and connectivity, and a stable political climate.

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Where to Locate Your Investment in Gujarat?

Located along the western coast of India, Gujarat boasts a 1600 km coastline, which is the longest in the country. The state contributes around 20 percent to India’s industrial production and merchandise exports, and the state’s ports handle about 40 percent of India’s cargo.

Gujarat economic profile

Gujarat is the second-largest producer of crude oil (onshore) and the fourth largest producer of natural gas, and it hosts the world’s largest petroleum refining hub at Jamnagar district. Food processing, IT/ITES, automotive, pharmaceuticals, and other sectors are also important industries in the state that are driving growth.

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Investing in Gujarat: Industrial Capacity and Preferential Policies

Gujarat’s Gross State Domestic Product (GSDP), which reached US$260 billion in FY 2022 and showed a 7 percent year-over-year (y-o-y) growth rate, is anticipated to reach US$280 billion in FY 2023. During the same period, the state’s per capita income was predicted to be $3,023 USD in FY 2022.

According to the latest recent government data, Gujarat attracted FDI flows totaling $30.6 billion between October 2019 and September 2022.

Gujarat also claimed the top spot in the Export Preparedness Index in 2021, with exports totaling US$1.21 billion.

Gujarat has 42 ports, comprising one major port and 41 non-major ports in terms of logistics and connectivity. In addition, the state operates 17 airports, including oneinternational airport in Ahmedabad. The Delhi-Mumbai Industrial Corridor (DMIC) provides further impetus for industrial growth in Gujarat, as 38 percent of the corridor lies in the state.

Key factors driving investment in Gujarat

Gujarat attracts investments due to its industrial and investment friendly policies and is one of the leading industrialized states in India. The state is recognized as an “Achiever” among the coastal states by DPIIT in Logistics Ease (LEADS 2022).

Besides better business and investment opportunities, there are 21 operational Special Economic Zones (SEZs), with 26 SEZs having formal approvals, eight notified Special Investment Regions (SIR), and 202 industrial estates in Gujarat. Additionally, eight new industrial estates to strengthen manufacturing MSMEs were launched alongside the creation of more small business opportunities in Gujarat.

Currently, the state has over 30,000 food processing units, 560 cold storage units, and 1,200 fish processing units. Gujarat also ranks first in terms of chemical manufacturing in India. The state has India’s first Petroleum, Chemicals, and Petrochemicals Investment Region for the manufacturing of petroleum products, chemicals, and petrochemicals.

Furthermore, Gujarat is also a leader in pharmaceutical manufacturing in India and accounts for 33 percent of the country’s sector turnover and 28 percent of exports.

Gujarat has also been producing a significant amount of green energy in India. In comparison to 7,541.5 megawatts (MW) in FY 2020, the state’s operational capacity for producing electricity from wind energy sources currently stands at 8,561.8 MW.

GIFT city

For offshore financial market investors, India’s first International Financial Services Center (IFSC) has been set up at Gujarat International Financial Tec-City (GIFT City) near Ahmedabad. Recent changes in tax regulations include the waiver of several tax liabilities like goods and services tax (GST), dividend distribution tax, and capital gains tax for entities operating in the IFSC GIFT City. According to tax experts, Category III alternative investment funds (AIF) setting up in IFSC GIFT City will benefit from zero tax on bond trading and zero tax on derivative trading, which is in line with offshore treaties. GIFT City is modelled along the hybrid structure of Singapore’s financial center.

DREAM city

Additionally, a Diamond Research and Mercantile (DREAM) City is also being developed close to Surat district in the state, to promote diamond trading from Gujarat at an estimated project cost of INR 24000 million. Spread over 2,000 acres, DREAM City will house an International Diamond Trading Hub and aDiamond Bourse.

What makes Rajasthan a top attraction for corporate investments?

Rajasthan, India’s largest state by area, borders Punjab, Haryana, Uttar Pradesh, Madhya Pradesh, and Gujarat, five other significant Indian states. Around 40 percentof the Indian market is accessible through this state’s bordering states, and it also acts as a vital transportation link between the northern Indian states and the ports along India’s western coast.

Rajasthan has a workforce that is highly skilled and supported by a large English-speaking talent pool. In FY 2021, the service sector contributed around 45 percent of the state’s gross value added (GVA) at current prices, while the agricultural sector made up about 30 percent.

With 82 major and minor minerals, Rajasthan is the second largest mineral producing state in India and produces more minerals than any other state in India. Rajasthan boasts of being the top producer of limestone, copper ore, silver, rock phosphate, and gypsum, in addition to being the only producer of zinc and lead in the nation and the greatest producer of marble.

The leading industries of Rajasthan other than mining and minerals are agri-processing, automotive, IT/ITES, petrochemicals, renewable energy, textiles, etc. More than 100 automotive and auto-component manufacturing units as well as about 850 factories in the food processing sector are located in the state.

Rajasthan economic profile

Rajasthan’s GSDP reached INR 11.96 trillion in FY 2022, up 11.06 percent y-o-y. The state’s per-capita income was INR 1,35,000 during that time.

In FY 2021, the service sector generated almost 45 percent of the state’s grossvalue added (GVA)at current prices, compared to the agriculture sector’s 30 percent contribution.

Rajasthan is dominating India’s clean energy sector in terms of renewable energy, with the highest installed solar generation capacity (over 13,000 MW). Rajasthan is home to the largest solar park in the world, a 2245 MW facility near Bhadla.

Adani recently announced investments worth INR 650 billion in Rajasthan over the course of the following five to seven years for the construction of a massive 10,000 MW solar power capacity, the expansion of a cement plant, and the modernization of Jaipur Airport. These investments were made at the Invest Rajasthan 2022 Summit.

Additionally, according to data from Invest India, during the period from October 2019 to September 2022, Rajasthan received FDI inflows of US$1.88 billion.

For more information and advice for foreign investors on doing business in India, please feel free to email us atindia@dezshira.com.

About Us

India Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in Delhi and Mumbai. Readers may write to india@dezshira.com for more support on doing business in in India.

We also maintain offices or have alliance partners assisting foreign investors in Indonesia, Singapore, Vietnam, Philippines, Malaysia, Thailand, Italy, Germany, and the United States, in addition to practices in Bangladesh and Russia.

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Gujarat, Rajasthan Emerge as India's Leading Investment Destinations (2024)

FAQs

Which state was India's top investment destination? ›

According to data from the Centre for Monitoring Indian Economy (CMIE), Gujarat has surpassed all other Indian states in attracting new investments from both domestic and foreign corporations.

Why is India considered as top investment destination? ›

India is one of the world's fastest growing major economies, with numerous investment opportunities. India's GDP is growing at a healthy rate, which is expected to continue. The government of India aims to achieve a GDP of $5 trillion by FY 2025, which opens up numerous opportunities for investment across sectors.

Is India an investment destination? ›

India has consistently delivered 9-11% returns, be it short-term or long-term investment, ranking it among the top 3 in the list of G20 nations delivering high returns. Return, consistency, resilience and opportunity are the factors supporting India's outperformance.

Why is investment declining in India? ›

The decline in the private corporate sector's investment after the global financial crisis was majorly responsible for the decline in the aggregate investment rate during the 2010s. Large-scale investments made during this period did not fructify as growth slowed down domestically and world trade decelerated.

Which city has highest investment in India? ›

Touted as the financial capital of India, Mumbai is one of the rapidly expanding cities in the world. Though the city is quite expensive when it comes to investing in real estate, some of the locations in Mumbai offer affordable housing options and are preferred by several buyers in today's times.

What are the main investing countries in India? ›

Trend on Foreign Direct Investment (FDI) in India. Singapore (27.01%) and USA (17.94%) have emerged as top 2 sourcing nations in FDI equity flows into India in FY2021-22 followed by Mauritius (15.98%), Netherland (7.86%) and Switzerland (7.31%).

What are the biggest foreign investments in India? ›

The computer software and hardware sector attracted the highest inflows during the first six months of this fiscal. It was followed by services, trading, chemicals, automobile and construction (infrastructure) activities. The country has registered its highest-ever FDI inflows of $84.84 billion in 2021-22.

What is the rank of India in world investment? ›

UNCTAD World Investment Report (WIR) 2022 has ranked India at 7th rank among the top 20 host economies for 2021, in terms of FDI.

What is India's top foreign direct investment? ›

Economic Survey 2023: India received the highest-ever FDI inflows of $ 84.8 bn in services in FY22. Economic survey by CEA V Anantha Nageswaran was tabled in the parliament on Tuesday by finance minister Nirmala Sitharaman, a day before she presents the budget for the next fiscal year.

Why is India a popular destination in the world? ›

1. Because of its vast history and heritage, many tourists are attracted to the monuments and museums all over the country. 2. Scenic landscapes like the Himalayan regions attract travellers in huge numbers.

What is the investment of India? ›

19.16 lakh crore (US$ 240.17 billion), up from Rs. 19.05 lakh crore (US$ 238.8 billion) on December 31, 2021. On the FDI front, in FY22, India received its highest-ever annual FDI inflow, standing at US$ 83.57 billion, a staggering 85.09% growth from US$ 45.15 billion FDI inflows in FY15.

Where to start investing in India? ›

How to invest in stocks?
  • Open a Trading and Demat Account. To be able to buy and sell shares, you need a trading account and a demat account. ...
  • Decide how you want to invest. ...
  • Pick the stocks you want to invest in. ...
  • Keep adding to your portfolio. ...
  • Monitor your portfolio.
Sep 18, 2022

Why is it so hard to invest in India? ›

Investing in India is Difficult

Foreign stock traders and real estate buyers face numerous hurdles when investing in India. In fact, you can't even legally purchase India property as a foreigner. You must either have status as an Indian citizen or PIO (person of Indian Origin) to own freehold land.

What are the factors affecting investment in India? ›

Factors Affecting Investment Decisions
Risk Factor1. Market Risk
Liquidity Factora) Funding Liquidity Risk
b) Market Liquidity Risk
Uniformity Factor
Quality of Returns Factor
7 more rows
Jul 28, 2022

What is low risk investment in India? ›

Bank Fixed Deposit (FD) Public Provident Fund (PPF) National Pension Scheme (NPS) Gold.

Who is the biggest investment in India? ›

Below is the list of the Top 10 Investors in India:
  • Radhakishan Damani.
  • Rakesh Jhunjhunwala.
  • Mohnish Pabrai.
  • Ashish Dhawan.
  • Nemish S Shah.
  • Vijay Kedia.
  • Akash Bhansali.
  • Ashish Kacholia.

Who is the king of investment in India? ›

Popularly known as the “Warren Buffett of India,” Rakesh Jhunjhunwala is one of the greatest stock market investors India has ever seen. Born on July 5, 1960, Rakesh Jhunjhunwala was a stock market veteran. His father was an Income Tax Officer.

Who invest most in India? ›

Performance Overview: Best Companies to Invest in India
  • Reliance Industries Ltd. ...
  • Tata Consultancy Services Ltd. ...
  • HDFC Bank Ltd. ...
  • ITC Ltd. ...
  • Hindustan Unilever Ltd. ...
  • Wipro. ...
  • Infosys Ltd. ...
  • State Bank of India.
Apr 26, 2023

Which country supports India? ›

Countries considered India's closest include the United Arab Emirates, Russian Federation, Israel, Afghanistan, France, Bhutan, Bangladesh, and the United States.

Who are the top 5 foreign investors In India? ›

Top investor countries in India in FY 2023. In FY 2023, Singapore accounted for maximum inward FDI in India at US$17.20 billion, followed by Mauritius (US$6.13 billion), the US (US$6.04 billion), UAE (US$3.35 billion), and the Netherlands (US$2.49 billion).

Which country is second largest investor In India? ›

USA is India's second biggest investor with FDI of $10.5 billion, with 18 per cent of total FDI.

Which foreign companies are successful in India? ›

Best 25 Multinational Companies in India:-
  • Microsoft. Headquarters: Hyderabad. ...
  • Apple Inc. Headquarters: Bangalore. ...
  • IBM (International Business Machines Corporation) Headquarters: Bangalore. ...
  • Google. Headquarters: Bangalore. ...
  • Amazon. Headquarters: Hyderabad. ...
  • The Coca Cola Co. Headquarters: Gurugram. ...
  • Pepsi Co. ...
  • Mahindra Group.

How can foreigners invest in India? ›

What Are the Several Ways of Foreign Investment in Indian Company?
  • By forming a company under the Companies Act of 1956.
  • Wholly owned subsidiaries or joint ventures.
  • Liaison Office / Representative Office Project Office Branch Office as a foreign entity's office.

Is India the largest foreign exchange holder in the world? ›

with nearly 7.34% of forex reserves in gold. The FCAs also include investments in US Treasury bonds, bonds of other selected governments and deposits with foreign central and commercial banks. As of September 2021, India holds fourth largest foreign-exchange reserves in the world following Switzerland.

Which country has highest investment? ›

United States Is World's Top Destination for Foreign Direct Investment. The United States recorded the largest increase of inward foreign direct investment of all economies in 2021.

What is India first in the world? ›

Let's not forget that India became the first (yes, the first!) nation in the world to successfully put the Mars Orbiter Mission (MOM), also called Mangalyaan, into orbit in its very first attempt.

Is India good for foreign direct investment? ›

India continues to be an attractive destination for foreign investment, ranking as the world's seventh-largest recipient of FDI in 2021. FDI is regulated primarily by India's Department of Promotion of Industry and International Trade (DPIIT), under its Foreign Exchange Management Act regime (FEMA Regime).

Which Indian sector attracts highest foreign direct investment Why? ›

The correct answer is Services Sector. For economic growth, Foreign Direct Investment (FDI) has been a major non-debt financial resource for the economic development of India.

Who has the biggest foreign direct investment In the world? ›

Top recipients of FDI inflows worldwide in Q3 2022 were the United States (USD 86 billion), Ireland (USD 37 billion) and the United Kingdom (USD 36 billion).

Why is India so famous for? ›

India is one of the world's most attractive countries, and multiple factors have increased its popularity among tourists. Its natural wonders, artificial marvels, national parks, theme parks, etc., have made it a popular name for tourism. Further, it is a land famous for its diverse cultures and enchanting landscapes.

Why is India so famous for tourism? ›

The country is known for its rich cultural heritage, diverse geography, and historical landmarks, which attract tourists from all over the world. Additionally, India is home to several UNESCO World Heritage sites, exotic wildlife, and adventure tourism opportunities.

What are 4 types of investments? ›

Bonds, stocks, mutual funds and exchange-traded funds, or ETFs, are four basic types of investment options.

Which is best investment for money in India? ›

Top Investment Plans in India in 2023
Investment OptionsPeriod of Investment (Minimum)Returns Offered
RBI Saving Bonds6 years8.00% p.a.
Bank Fixed Deposits7 days to 10 years5-8% p.a.
Initial Public Offerings (IPO)NANA
Direct EquityDecided by the investorNA
12 more rows

What is the safest investment with the highest return in India? ›

Fixed deposit

Fixed deposit (FD) is often hailed as one of the most stable and safe investment with high returns in India. It is advisable to invest in fixed deposit because of the following reasons: Accumulate higher returns by availing FD schemes from credible financiers.

Which business to invest money in India? ›

Here is the list of the top 16 profitable businesses in India that don't cost you an arm and a leg.
  • Interior Design and Decoration. This one is for the creative souls! ...
  • Pharmaceutical Businesses. ...
  • Organic Farming. ...
  • Labour Contractor. ...
  • Cloud Kitchen. ...
  • Fashion Accessories. ...
  • Photography. ...
  • Exclusive Plant Nurseries.

Is it better to invest in India or USA? ›

Volatility. When compared to Indian markets, the US markets have been less volatile in the long run. Indian equities have shown great volatility, with bigger swings in returns over the years. This is another reason experts recommend diversification when it comes to investing, since risks are spread out and diminished.

Can I invest in India from USA? ›

Repatriation: NRIs can invest in the Indian market on a repatriation basis using their NRE or FCNR account. Investment on repatriation basis means an investment, the sale/ maturity proceeds of which are, net of taxes, eligible to be repatriated out of India.

What is the best time to invest in India? ›

The best time of day to buy stocks: The best time to buy stocks during the day in India is widely considered to be between 9:30 AM and 10:30 AM. This window has been popularised by day traders who buy and sell stocks during market hours (9:30 AM to 3:30 PM). The market opens at 9:15 AM.

What is investment environment in India? ›

The investment environment refers to the economic, political, and social conditions that affect the investment market and the performance of financial instruments. As part of treasury management, understanding the investment environment is critical to making informed investment decisions and managing investment risks.

What is the importance of investment? ›

Why is investing important? Investing is an effective way to put your money to work and potentially build wealth. Smart investing may allow your money to outpace inflation and increase in value. The greater growth potential of investing is primarily due to the power of compounding and the risk-return tradeoff.

What is the trend of saving and investment in India? ›

While household financial savings have since then moderated from 15.4% in 2020-21 to 11.1% in 2022-23, savings in physical assets have grown sharply to 11.8% in 2021-22 from 10.7% in 2020-21.

Which is the best investment in India for middle class? ›

Best Investment Plans for Middle Class
  • Public Provident Fund.
  • RBI Bonds.
  • National Pension Schemes.
  • Debt Mutual Funds.
  • Bank Deposits.
  • Unit Linked Insurance Plans (ULIPs)
  • Real Estate - REITs.
  • Post Office Monthly Income Scheme (POMIS)
Jan 22, 2023

What is the safest type of investment? ›

What are the safest types of investments? U.S. Treasury securities, money market mutual funds and high-yield savings accounts are considered by most experts to be the safest types of investments available.

What gives the highest return on investment? ›

A stock represents a share of ownership in a company. Stocks offer the biggest potential return on your investment while exposing your money to the highest level of volatility.

Which state has the highest return on investment? ›

1. Wyoming: 203% 5-year ROI on College. Wyoming has some of the highest wages for high school graduates: $31,936 a year, on average.

Which cities are best for investment in India? ›

Best Cities For Investment
  • Pune. Pune is Maharashtra's second-largest real estate market after Mumbai. ...
  • Bangalore. Because it is convenient to reside there and because IT parks and manufacturing facilities are expanding, Bangalore is well-known for real estate investment. ...
  • Navi Mumbai. ...
  • Gurgaon. ...
  • Shimla. ...
  • Daman. ...
  • Lonavala. ...
  • Haryana.
Jan 10, 2023

Where does the maximum foreign investment come from India? ›

Total FDI inflows in the country in the FY 22-23 is $ 70.97 Bn and total FDI equity inflows stands at $ 46.03 Bn. Mauritius (26%), Singapore (23%), USA (9%), Netherland (7%) and Japan (6%) emerge as top 5 countries for FDI equity inflows into India FY 2022-23.

What city has the highest return on investment? ›

RankCityObserved rent value ($)
1San Jose, CA3,289.09
2Missoula, MT1,353.53
3San Francisco, CA3,121.83
4Logan, UT1,266.33
6 more rows
Jun 3, 2023

In which investment return is high? ›

Fixed deposit

Fixed deposit (FD) is often hailed as one of the most stable and safe investment with high returns in India. It is advisable to invest in fixed deposit because of the following reasons: Accumulate higher returns by availing FD schemes from credible financiers.

What is the safest and biggest return on investment? ›

High-quality bonds and fixed-indexed annuities are often considered the safest investments with the highest returns. However, there are many different types of bond funds and annuities, each with risks and rewards.

Which place is best for living in India? ›

Summing Up: Most Livable Cities in India

In the 2022 list, Bangalore secured first position, followed by Pune, Ahmedabad, Chennai, Surat, Navi Mumbai, Coimbatore, Vadodara, Indore and Greater Mumbai. Cities are judged based on culture and environment, stability, health, infrastructure and education.

Why is foreign capital important In India? ›

Foreign investment can help boost economic development by providing the necessary capital and resources to finance new projects, expand existing ones, and modernize infrastructure. This can lead to increased productivity, job creation, and overall economic growth.

Is India the largest foreign exchange holder In the world? ›

with nearly 7.34% of forex reserves in gold. The FCAs also include investments in US Treasury bonds, bonds of other selected governments and deposits with foreign central and commercial banks. As of September 2021, India holds fourth largest foreign-exchange reserves in the world following Switzerland.

Which country has the largest direct foreign investment In the United States? ›

In 2021, no country had a higher foreign direct investment (FDI) position in the United States than Japan, followed by the Netherlands and Canada. At that time, Japan had over 690 billion U.S. dollars invested in the United States.

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