Gujarat tops NITI Aayog’s first investment friendliness index; Maharashtra, Tamil Nadu follow | Today’s news
New Delhi: Gujarat emerged as India’s most investment-friendly state ahead of Maharashtra and Tamil Nadu in the first edition of NITI Aayog’s investment friendliness index, as the government’s policy think tank unveiled a new framework to assess how effectively states are creating an environment that attracts and sustains investment.
The index was announced in the Union Budget 2026-27 after Prime Minister Narendra Modi called for an “Investment Friendly Charter” during the ninth meeting of NITI Aayog’s Governing Council, which encourages states to improve policies, regulatory clearances, land availability, power supply, access to water and other factors influencing investment decisions.
Unlike earlier assessments that focused largely on regulatory approvals and process reforms, the Investment Friendliness Index takes into account the quality of infrastructure, logistics, availability of skilled human resources, institutional capacity, fiscal health, environmental resilience and regulatory predictability to assess a country’s ability to attract, facilitate and retain investment over the long term.
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The ranking assumes significance as the Center seeks to strengthen the investment climate across states to sustain foreign capital inflows. Against a target of attracting USD 100 billion in foreign direct investment (FDI), gross inflows rose to a record USD 94.53 billion in fiscal year 2026 (FY26) from USD 71.28 billion in FY24.
Who placed where
The top five were placed in the overall ranking Gujarat, Maharashtra, Tamil Nadu, Goa and Odisha. Fifteen states, including Delhi, Andhra Pradesh and Uttar Pradesh, were placed in the “Frontrunners” category, while eight states were classified as “Emerging Performers” and “Aspiring”.
Among the large states, Gujarat ranked 56.6, followed by Maharashtra (53.7) and Tamil Nadu (53.3). Uttarakhand emerged as the best performing state among hilly and northeastern states, ahead of Assam and Himachal Pradesh, while Goa topped the list among Union territories and urban states, followed by Delhi and Chandigarh.
The rankings also reveal different levels of investment readiness among historically less industrialized nations. Odisha emerged as the fifth best performing large state with a score of 52.4, while Madhya Pradesh ranked seventh with 48.9 points. Uttar Pradesh was ranked 19th with a score of 45.0, while Jharkhand and Bihar were ranked 25th and 26th with scores of 41.3 and 41.2.
The report attributes Gujarat’s top ranking to its strong performance in infrastructure, business climate, financial health, regulatory systems and government policies. It cites well-developed port infrastructure, reliable electricity supply, a strong industrial ecosystem and a favorable business environment as key strengths.
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Maharashtra maintained its second position due to its diversified economy, deep financial markets, strong private equity and venture capital ecosystem and innovative infrastructure, while Tamil Nadu’s position was supported by its manufacturing base, export performance, efficient port network and higher conversion of investment proposals into operational projects.
Methodology
A framework developed by the company NITI Aayog with knowledge partner CRISIL rates countries using 84 indicators grouped into eight pillars – infrastructure, business climate, resources, regulatory ease, government policy, institutional environment, financial health and environmental resilience. Together, they measure transport and logistics infrastructure, industrial land and utilities, natural and human resources, governance, fiscal management, political support and environmental preparedness.
The methodology involved an extensive screening process. The exercise initially identified around 953 indicators drawn from international indices, government databases and academic literature, before narrowing them down through statistical validation and expert consultation to a final set of 84 indicators. The framework has been refined through consultation with central ministries, state governments, industry associations, multilateral institutions, regulators, export promotion councils, consultancy firms, investment banks, sovereign wealth funds and private equity investors to ensure that it reflects both policy priorities and investor expectations.
In addition to official data, the assessment includes feedback from more than 1,850 investors and industry stakeholders, capturing practical experiences regarding approvals, regulatory response, institutional effectiveness and the overall business environment. Combining objective indicators with investor perception surveys provides a more comprehensive assessment of investment conditions across states, according to the report.
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NITI Aayog has positioned the Investment Friendliness Index as a policy reform tool rather than just an assessment. According to the report, it is intended to help governments benchmark performance, identify reform gaps, learn from better-performing peers and continuously strengthen their institutional frameworks, while providing investors with an evidence-based benchmarking of investment conditions in India.
In a related development, Chhattisgarh almost attracted ₹973 million investment commitments from four textile and apparel companies under the Industrial Development Policy 2024-2030. The proposed investment is led by Saravana Mills ( ₹528 crore) and Swift Textiles ( ₹235 crore), with additional commitments from Puneet Creations and Drishti Designs LLP.
