India continues to attract foreign investors looking for technology talent, manufacturing capacity, financial services opportunities and access to a large domestic market. However, choosing the right location requires more than comparing infrastructure and labour costs. India’s leading business cities have developed distinct investment ecosystems, supported by sector-specific policies, industrial clusters and government initiatives. Recent developments include new Global Capability Centre (GCC) policies, expansion of international financial services and increased investment in advanced technology. For international companies evaluating foreign direct investment (FDI) in India, understanding the strengths of each city is essential to selecting the right business location. This guide examines seven major investment destinations, their industry advantages, recent developments and practical business setup considerations.
Foreign direct investment in India
India continued to attract substantial foreign investment in FY 2025–26. According to the Department for Promotion of Industry and Internal Trade (DPIIT), India’s total FDI inflow reached approximately US$94.53 billion, representing a 17% increase over the previous financial year. This total includes equity capital, reinvested earnings and other capital.
| Sr No. | State | Foreign Direct Investment state wise | Key Strength |
| 1 | Maharashtra | US$18.42 billion | Financial services, technology, GCCs and corporate headquarters |
| 2 | Karnataka | US$12.94 billion | IT services, software development, R&D and technology GCCs |
| 3 | Delhi | US$ 6.18 billion | Corporate services, technology and access to the Delhi-NCR market |
| 4 | Gujarat | US$ 5.71 billion | Manufacturing, chemicals, pharmaceuticals and industrial infrastructure |
| 5 | Tamil Nadu | US$ 4.72 billion | Automotive manufacturing, engineering, electronics and exports |
| 6 | Telangana | US$ 2.25 billion | IT and technology services, pharmaceutical manufacturing and government investment incentives |
Mumbai (Maharashtra)
Mumbai remains a preferred destination for foreign investors entering India’s financial services market. Its concentration of banks, insurance companies, investment firms, professional services providers and corporate headquarters makes it particularly suitable for businesses requiring access to financial institutions. The Mumbai metropolitan region, including Navi Mumbai, also offers significant opportunities in digital infrastructure, data centres, logistics and international trade.
An important recent development is Maharashtra’s Global Capability Centre Policy 2025, which aims to attract new GCC investments and strengthen the state’s position as a destination for high-value corporate functions. Mumbai is particularly relevant for multinational companies establishing financial GCCs, regional management offices and risk management teams.
Mumbai also benefits from strong transport and trade connectivity, supported by the Jawaharlal Nehru Port (JNPA) in Navi Mumbai, Mumbai Port, an international airport, and an extensive road and rail network. These connections facilitate international shipping, import-export activities, and the movement of goods across major Indian markets. For foreign investors, this infrastructure makes the Mumbai metropolitan region a practical choice for financial services, logistics, data centres, and businesses requiring access to international trade networks. For foreign investors, Mumbai’s important consideration is cost. Premium office rentals, employee compensation and commuting requirements can significantly influence operating expenditure.
Bengaluru (Karnataka)
Bengaluru is one of the strongest destinations for foreign companies establishing technology-led operations in India. Its combination of software engineering talent, research institutions, technology startups and multinational technology companies supports businesses moving beyond traditional outsourcing towards product development, artificial intelligence and global research operations.
A significant policy development is the Karnataka GCC Policy 2024–2029, which seeks to strengthen the state’s GCC ecosystem and encourage higher-value business functions. Karnataka’s broader technology strategy also reflects growing interest in artificial intelligence, digital infrastructure and advanced engineering. For investors, the opportunity is not simply access to lower cost technical talent; it is the ability to establish teams responsible for global product development and innovation.
Bengaluru also benefits from strong air connectivity through Kempe Gowda International Airport, which supports international business travel and global operations. Its road network connects major technology parks and industrial areas with neighbouring manufacturing hubs, while ongoing infrastructure development aims to improve regional connectivity. Businesses should nevertheless evaluate competition for experienced employees, office rental costs and traffic congestion. A carefully selected location can improve recruitment, employee retention and operating efficiency.
New Delhi
Delhi-NCR, which includes Gurugram, Noida, and surrounding business districts, is among the most versatile destinations for foreign investment in India. The region combines access to government institutions, a large consumer market, corporate headquarters, and extensive business infrastructure. Its international airport and road connectivity also support regional and global business operations.
Major industries across Delhi include information technology, business process management, consulting, telecommunications, automotive manufacturing, electronics, retail, e-commerce, and financial services. Gurugram is known for its concentration of multinational corporations, corporate offices, and technology-driven businesses, while Noida has developed a significant presence in IT services, electronics manufacturing, and commercial infrastructure.
Delhi-NCR benefits from extensive road connectivity through national highways and expressways. Indira Gandhi International Airport provides access to international markets, while rail networks and dedicated freight corridors in the wider region support logistics and distribution. These connectivity advantages make the region suitable for foreign investors seeking efficient supply chains, corporate offices, electronics manufacturing, and access to India’s large consumer market. Businesses must also assess the relevant state level policies and identify whether their operations are better suited to Gurugram, Noida, or another nearby industrial area.
Hyderabad (Telangana)
Hyderabad has established itself as a major destination for international businesses seeking a combination of technology talent, modern infrastructure, and competitive operating costs. The city has attracted multinational companies across technology, pharmaceuticals, biotechnology, and research, supported by established commercial districts and a growing innovation ecosystem.
Compared with some larger metropolitan business districts, Hyderabad can offer a favourable balance between infrastructure quality and operating expenses, although actual costs depend on the industry and location. Hyderabad benefits from strong air connectivity through Rajiv Gandhi International Airport, which supports international business travel and the movement of high-value goods. The city’s established pharmaceutical and life sciences clusters, supported by logistics infrastructure and specialised research facilities, make it an attractive location for foreign investors seeking to establish technology operations, pharmaceutical manufacturing units, and research and development centres.
Chennai (Tamil Nadu)
Chennai is a prominent Indian city for foreign investors focused on manufacturing, engineering, automotive production, and international trade. Its established industrial base, port connectivity, supplier networks, and engineering talent make it particularly suitable for companies that require reliable access to manufacturing infrastructure and export channels.
Chennai’s strategic coastal location provides access to major maritime trade routes through Chennai Port and Kamarajar Port at Ennore, supporting imports of industrial inputs and exports of manufactured goods. The city is also connected to major industrial hubs through national highways, rail networks, and established freight corridors.
Chennai is also becoming increasingly relevant for multinational companies establishing engineering and business services centres connected to manufacturing operations. Before setting up in Chennai, investors should evaluate industrial land availability, proximity to ports and suppliers, utility requirements, workforce skills, and logistics costs. Manufacturing businesses must also consider environmental clearances, factory approvals, labour compliance, and the suitability of local industrial parks. For companies prioritising production capacity and supply chain integration, Chennai offers a strong industrial foundation.
Pune (Maharashtra)
Pune offers a strong combination of manufacturing expertise, engineering talent and technology services. Its automotive and industrial ecosystem makes it particularly attractive to foreign companies that need product development teams working closely with manufacturing facilities and suppliers.
Maharashtra’s GCC Policy 2025 is a significant development for Pune. The state’s expansion plans aim to attract additional GCCs and create high-skilled employment, while extending opportunities to other cities across Maharashtra. Pune’s existing engineering base makes it especially relevant for companies establishing research, design, digital engineering and advanced manufacturing support centres. Pune benefits from road connectivity to Mumbai and other major industrial centres through the Mumbai–Pune Expressway and national highways, supporting the movement of goods, employees, and industrial supplies.
Compared with Mumbai’s premium commercial districts, Pune may offer a more suitable cost structure for certain technology and industrial operations, although costs vary by location and facility type. For companies combining a manufacturing facility with a GCC, Pune can provide a useful balance between technical talent and industrial capabilities.
Ahmedabad and GIFT City (Gujarat)
Ahmedabad and the wider Gujarat industrial region offer opportunities in pharmaceuticals, textiles, chemicals, engineering, renewable energy, food processing and manufacturing. Established industrial clusters, supplier networks and access to Gujarat’s port infrastructure make the region attractive for foreign companies planning production, exports or industrial partnerships.
However, investors should distinguish Ahmedabad’s conventional industrial ecosystem from GIFT City, located in Gandhinagar. Gujarat International Finance Tec-City is India’s first operational International Financial Services Centre (IFSC) and a specialised destination for eligible international financial activities. It is designed for businesses such as banking units, fund management companies, insurance and reinsurance providers, aircraft and ship leasing businesses, fintech companies and corporate treasury operations.
The wider Gujarat region benefits from strong road and rail connectivity, access to major ports such as Mundra and Deendayal Port, and established industrial corridors that support domestic distribution and international trade. Meanwhile, GIFT City’s modern commercial infrastructure and specialised financial ecosystem offer advantages for eligible international financial services businesses. Businesses should examine the IFSC regulatory framework, authorisation requirements, substance obligations and tax rules before deciding to establish a unit there.
Key Considerations for Setting Up a Business in India
Selecting a city is only the first step in establishing a successful Indian operation. Foreign investors must identify an appropriate legal structure, such as an Indian subsidiary or another permitted form of presence, based on their business model and regulatory requirements. Foreign direct investment rules differ by sector, with some activities permitted under the automatic route and others requiring government approval or compliance with ownership restrictions.
Investors should also assess company incorporation, taxation, GST registration where applicable, employment laws, intellectual property protection, data protection obligations and industry-specific licences. State-level incentives can improve project economics, but eligibility may depend on investment thresholds, job creation, business activity, location and formal approval. Incentives should therefore be verified against current official guidelines rather than treated as guaranteed benefits.
Conclusion
India offers foreign investors a diverse range of business destinations, each with distinct advantages. Mumbai is a strong choice for financial services and corporate operations, Bengaluru for technology and innovation, Delhi-NCR for corporate expansion and electronics, Hyderabad for life sciences and emerging technologies, Chennai for manufacturing, Pune for engineering and GCCs, and Ahmedabad for industrial investment. GIFT City adds a specialised international financial services option within Gujarat. By examining recent policy developments alongside practical business setup considerations, foreign companies can identify locations that align with their strategic objectives and establish a sustainable presence in the Indian market.
Frequently Asked Questions (FAQs)
- Which Indian cities are best for foreign investors to establish a business?
Mumbai is ideal for financial services and corporate headquarters, while Bengaluru is well suited for technology and innovation. Chennai and Pune are strong choices for manufacturing and engineering, whereas Hyderabad offers opportunities in pharmaceuticals and biotechnology. Delhi-NCR and Ahmedabad are attractive for corporate operations, electronics, and industrial expansion.
- Which industries offer the best opportunities for foreign investment in India?
India offers opportunities in information technology, financial services, automotive manufacturing, pharmaceuticals, biotechnology, electronics, renewable energy, and engineering. The most suitable sector depends on the investor’s business objectives, market demand, available infrastructure, and applicable foreign direct investment (FDI) regulations.
- What factors should foreign investors consider when choosing a city in India?
Foreign investors should assess operating costs, skilled workforce availability, infrastructure, connectivity, supplier networks, and proximity to customers. They should also review state-level incentives, sector-specific regulations, taxation requirements, and business setup costs to identify a location that supports long-term growth.
- What are the key legal requirements for setting up a business in India as a foreign investor?
Foreign investors must select an appropriate business structure, comply with applicable FDI rules, and complete company registration where required. Investors should verify current regulatory requirements before commencing operations.
