The proliferation of tech startups in India and the investor interest they have generated has changed the composition of foreign direct investment inflows into the country.

The share of Bangalore – home to many tech startups -- in FDI inflows has more than tripled while the computer hardware and software sector has attracted eight times higher amount in the first half of 2015-16. Also, Singapore – home to Flipkart’s parent -- has emerged as the top source of FDI by outpacing Mauritius, which has lost its edge due to uncertainty over the revision of a tax treaty with India.

“Bangalore has come up in the last 12-24 months as a breeding ground for tech startups and has a fertile environment that is attracting FDI,” said Prasad Gadkari, partner at IDFC Private Equity.

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