KOCHI: Despite an aggressive campaign involving high-profile foreign trips and investment summits, Kerala’s foreign direct investment (FDI) equity inflows remain abysmally low – especially when compared with its southern peers.
In FY 2024–25, Kerala attracted just Rs3,400 crore in FDI equity inflows. This modest figure raises questions about the real outcomes of the state’s global outreach initiatives, spearheaded by Chief Minister Pinarayi Vijayan and Industries Minister P. Rajeeve.
In sharp contrast, Karnataka drew Rs56,920 crore ($6.6 billion), followed by Tamil Nadu at Rs33,660 crore ($3.68 billion), and Telangana at Rs25,715 crore ($3 billion) during the same period. Kerala only managed to stay ahead of Andhra Pradesh, which logged $1.1 billion – but even that was solely from the most recent fiscal year.
Over a six-year period (2019–2025), cumulative FDI equity data reveals an even starker disparity. Karnataka topped the charts with Rs4.96 lakh crore ($57.6 billion), Tamil Nadu received Rs1.26 lakh crore ($14.6 billion), and Telangana Rs92,622 crore ($10.77 billion).
Kerala’s six-year total stood at just Rs11,825 crore ($1.38 billion), representing only 0.48 per cent of the total FDI equity India received during this time. Among the five southern states, Kerala’s FDI share is a paltry 1.6 per cent.
Government’s claims
Despite the numbers, the Kerala government remains optimistic. “We could register a commendable growth though the amount is low when compared with top-ranking states,” said Industries Minister P. Rajeeve, referring to the Rs3,300–Rs3,400 crore inflow in FY 2024–25. “Kerala has the potential to draw more investments. Our Invest Kerala proposals will bear fruit in the coming years.”
Chief Minister Vijayan has also repeatedly defended the global investment drives, arguing that such trips were necessary to create visibility and confidence among global investors.
Ground reality
However, analysts point out that FDI equity – the most reliable indicator of foreign investor confidence – remains low despite repeated outreach efforts and branding campaigns.
“These trips may help with optics, but investors look for ease of doing business, speed of clearances, and predictable policies. Kerala has works to do on that front,” said an industry expert who requested anonymity.
Notably, public investment in Kerala through Central sector projects has been strong. The state received Rs62,476 crore in central project funding over the same period—over Rs51,000 crore of which was spent on roads and transport infrastructure. Yet, this has not translated into parallel growth in private capital inflows, highlighting a missed opportunity.
More than optics
Critics argue that the government’s focus on promotional efforts may be misplaced unless accompanied by deep policy reforms and structural ease for doing business. Kerala’s FDI equity inflow consistently hovers below the 1 per cent national share, and without targeted improvements, analysts believe the trend is unlikely to shift.
“Global outreach without local readiness is like advertising a product you can’t deliver,” quipped a Kochi-based economist, summing up Kerala’s current predicament.
