In the 2024 Legislative Assembly elections, Maharashtra witnessed a landslide victory for the Bharatiya Janata Party (BJP)-led Mahayuti alliance, securing 236 seats in the 288-member assembly. Maharashtra is India’s premier state, hosting the country’s financial capital in Mumbai and attracting the highest foreign direct investments (FDI) in the country. A decisive win means this exalted status can see acceleration. In its election manifesto, the BJP, which emerged as the largest party, has set an ambitious goal of transforming Maharashtra into a $1 trillion economy by 2028.[1] The state aims to increase all investments to 37% of Gross State Domestic Product (GSDP), up from the current rate of 25%.[2]
Maharashtra is the largest contributor to India’s GDP with, accounting for 13.9%. With Mumbai as India’s financial capital and the major manufacturing and tech hub of Pune, the state has a $512.8 billion economy. [3] At $4,000, Maharashtra has the highest per capita GSDP in India.
Still, the state will need more investments. Despite a multitude of talent and capital, the state has been virtually bankrupt for the last five years, thanks to political instability, mismanagement and underinvestment. According to the Comptroller and Auditor General of India (CAG), Maharashtra’s total outstanding liabilities stood at around $77.98 billion at the end of the 2022-23 fiscal year.[4]
Two years ago, the state’s intensely competitive politics moved into high gear when three main political parties became six. Welfare populism became the way to differentiate, with extravagant promises made. In the last six months, 40 schemes and projects were launched, which put the state in a $10.84 billion hole; this is likely to continue for the next four years.[5]
Therefore, Maharashtra will need to raise funds and increase revenue. Most importantly, it must focus on increasing its FDI share and achieve the $1 trillion by 2028 target set by Devendra Fadnavis as deputy chief minister in November 2023. Earlier that year, then Chief Minister Eknath Shinde stated that his government signed MOUs for investments worth $42.53 billion at the World Economic Forum in Davos.[6] However, how much of this will materialize, remains to be seen
India’s FDI has been on the rise, with top sources of FDI in the fiscal year 2023–24 being Singapore ($11.77 billion), Mauritius ($7.97 billion), the U.S. ($4.99 billion), the Netherlands ($4.93 billion), and Japan ($3.17 billion)[7] Being the top sources of FDI in the fiscal year 2023–24, major investments in Maharashtra mirror some of this, with developed countries such as the U.S., Germany, Italy, and France being top of the FDI list. These countries have played a significant role in sectors including automotive, aerospace, agro-food processing, chemicals, and electronics. (See Table 1) In fact, Maharashtra is privileged in that it receives at least a third, the largest share, of India’s total FDI. This surged in the first quarter of the financial year 2024-25, when Maharashtra received an FDI of $8.48 billion, accounting for 52.46% of India’s total FDI equity inflow of $16.1 billion.[8]. Over the past five years, Maharashtra has attracted investments worth $77.5 billion, representing 31% of India’s total FDI equity inflow (Figure 1).
However, when comparing state-wise FDI equity inflow over the last decade, Maharashtra’s share has remained the same, between 28% and 31% (Figure 2). In contrast, states like Gujarat and Karnataka have seen a significant rise in their FDI shares.
Gujarat, for example, increased its share from 4% in FY 2014-15 to 17% in FY 2023-24, and in FY 2020-21, its FDI equity inflow surged to 30%, surpassing Maharashtra’s share of 28%. Similarly, Karnataka grew its share from 7% in FY 2014-15 to 22% in FY 2023-24.
The uneven distribution of investments remains a significant challenge in Maharashtra. Major foreign investments are primarily concentrated in the Mumbai Metropolitan Region (MMR) and western Maharashtra. The top five exporting districts—Mumbai Suburban, Mumbai City, Pune, Thane, and Raigad—together contribute 74% of the state’s total exports.[9]
Manufacturing activity is largely centred around Special Economic Zones (SEZ) and urban hubs, with significant presence in Pune and Nashik, alongside emerging activity in Aurangabad and Nagpur (See Table 1).
| Table 1. Major foreign players in the key sectors and their plant locations within Maharashtra. | |||
| Focus Sectors | Major Investments | Country | Plant location |
| Auto and Auto Components | Bosch | Germany | Nashik |
| Mercedes-Benz | Germany | Pune | |
| Fiat | Italy | Pune | |
| Goodyear | U.S. | Aurangabad | |
| Kawasaki | Japan | Pune | |
| Piaggio | Italy | Pune | |
| Škoda | Czech Republic | Pune, Aurangabad | |
| Volkswagen | Germany | Pune, Aurangabad | |
| Aerospace and Defense | Boeing Top of FormBottom of Form | U.S. | Nagpur |
| Agro Food Processing | Kelloggs | U.S. | Raigad |
| Mondelez | U.S. | Pune | |
| McCain | Canada | Raigad | |
| Mars Inc. | U.S. | Pune | |
| Bauli | Italy | Pune | |
| General Mills | U.S. | Nashik | |
| Diageo | UK | Nashik | |
| Chemical and Pharma | BASF | Germany | Thane |
| Dow | U.S. | Raigad | |
| Indorama | Singapore | Nagpur | |
| Croda | UK | Thane | |
| Information Technology | Ubisoft | France | Pune |
| Gems and Jewelry | Swarovski | Austria | Pune |
| Electronics | Emerson Electric Co. | U.S. | Pune |
| Haier | China | Pune | |
| Schneider Electric | France | Nashik | |
| Honeywell | U.S. | Pune | |
| Jabil | U.S. | Pune | |
| LG | South Korea | Pune | |
| Philips | Netherlands | Pune | |
Source: Maharashtra Industrial Development Corporation (MIDC)
In recent years, Maharashtra has struggled to attract major foreign investments, a key issue highlighted during the elections. Both the Mahayuti and Maha Vikas Aghadi alliances pointed fingers at each other over this issue. According to a working paper by the Economic Advisory Council to the Prime Minister (EAC-PM), Maharashtra’s GDP share has declined from 15.2% in 2010-11 to 13% in 2020-21.[10]
The main problems are a complex bureaucracy, difficulty in obtaining permits and licenses, access to finance for MSMEs and occasional political instability. In the Ease of Doing Business (EoDB) rankings for Indian states, which assesses factors such as business registration, tax compliance, permit approvals, and infrastructure access. In the 2024 rankings, jointly released by the Department for Promotion of Industry and Internal Trade (DPIIT) and the World Bank, Maharashtra slipped to the 14th position, down from 13th in 2020.[11]
The winning BJP has pledged to implement an Ease of Doing Business Act in Maharashtra to streamline processes and facilitate business operations in the state. Additionally, the party has promised to introduce the ‘Make in Maharashtra’ policy to boost the manufacturing sector. As part of this initiative, Jalgaon, Amravati, Nanded, and Solapur are set to be developed as new industrial hubs for sunrise industries.
The politicians and mandarins in Maharashtra’s Mantralaya have a short time to activate and accelerate these plans and achieve their goals. The clock is ticking on the state becoming a $1 trillion economy by 2028, which means raising its GSDP growth rate to 17.55% – a significant increase from the current 7.85% – before the term of this new government runs out.
Aditya Shinde is Research Assistant, Gateway House.
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References
[1] “Sankalp Patra 2024,” Bharatiya Janata Party, Maharashtra, https://www.bjp.org/files/inline-documents/MANIFESTO-ENGLISH-2024-09-11-24_0.pdf
[2] Speech of Shri Devendra Fadnavis on the Budget Estimates, 2023-2024 of the Government of Maharashtra in the Legislative Assembly on Thursday, the 9th March 2024, https://maharashtra.gov.in/Site/Upload/Pdf/Budget-Speech-Part-I.pdf
[3] Economic Survey of Maharashtra, 2023-24, https://maitri.maharashtra.gov.in/wp-content/uploads/pdf/2023-24.pdf
[4] file:///C:/Users/Admin/Desktop/State-Finance-Report-2022-23-0669521f380fde6.90168828.pdf
[5] Saurabha Kulshreshtha and Yogesh Naik, “Eknath Shinde cabinet approves 40 sops and projects before Maharashtra polls,” Hindustan Times, Oct 1, 2024, https://www.hindustantimes.com/cities/mumbai-news/40-sops-and-projects-approved-by-cabinet-before-polls-101727723500626.html
[6] “World Economic Forum, Davos: Maharashtra bags investment worth Rs 3.53 lakh cr, says CM,” Indian Express, Jan 18, 2024, https://indianexpress.com/article/cities/mumbai/world-economic-forum-davos-maharashtra-bags-investment-worth-rs-3-53-lakh-cr-says-cm-9114476/
[7] Fact Sheet on Foreign Direct Investment, April 2000 to June 2024, DPIIT, https://dpiit.gov.in/sites/default/files/fdi%20factsheet%20june%202024.pdf
[8] FDI equity inflow refers to the investment made by a foreign entity directly into the equity or ownership of a company in a host country. It is a critical component of overall FDI and reflects the level of confidence foreign investors have in the host country’s economic environment, regulatory framework, and growth potential. https://dpiit.gov.in/sites/default/files/fdi%20factsheet%20june%202024.pdf
[9] “MAHARASHTRA EXPORTS ECOSYSTEM,” MAITRI, https://maitri.maharashtra.gov.in/en/maharashtra-exports-ecosystem/#:~:text=Maharashtra%20is%20the%20second%20highest,74%25%20of%20state’s%20total%20exports.
[10] “Relative Economic Performance of Indian States: 1960-61 to 2023-24,” PM-Economic Advisory Council, September 2024, https://eacpm.gov.in/wp-content/uploads/2024/09/State-GDP-Working-Paper_Final.pdf
[11] “Ease of Doing Business: Maharashtra,” MAITRI, https://maitri.mahaonline.gov.in/Home/EaseOfDoingBusiness