NITI Aayog launches index to rank states on investment climate

The Investment Friendliness Index evaluates all 28 states and eight Union Territories using a structured, data-driven framework that examines the conditions influencing investment decisions.

NITI Aayog has unveiled the Investment Friendliness Index (IFI), a new framework designed to measure how effectively states and Union Territories create an environment that attracts businesses and investment. The index is intended to encourage reforms, strengthen competitive and cooperative federalism, and help India achieve its long-term goal of becoming a developed nation under the Viksit Bharat @2047 vision.

The report follows a direction from Prime Minister Narendra Modi during the ninth Governing Council meeting of NITI Aayog in July 2024, where he called for an investment-friendly charter to improve the country's investment ecosystem. The Union Budget 2025–26 later announced the creation of the Investment Friendliness Index to benchmark the performance of states and Union Territories.

Index measures investment ecosystem across India

The Investment Friendliness Index evaluates all 28 states and eight Union Territories using a structured, data-driven framework that examines the conditions influencing investment decisions. It assesses eight broad pillars: infrastructure, business climate, resources, government policy, regulatory ease, institutional environment, financial health and environmental resilience.

The framework has been developed using 84 indicators, combining official data with feedback collected through investor perception surveys. According to NITI Aayog, the approach provides a balanced assessment by measuring both policy performance and the experience of businesses operating across different regions.

The report highlights that while the Central Government provides the overall policy direction, state governments play the most significant role in shaping the investment climate through infrastructure, governance, regulatory efficiency and policy stability.

Gujarat, Maharashtra and Tamil Nadu lead rankings

Based on overall performance, Gujarat, Maharashtra, Tamil Nadu, Goa and Odisha have been recognised as the country's Top Performers. The report also places 15 states in the Frontrunners category, while eight states and Union Territories each fall under the Emerging Performers and Aspiring States categories.

To ensure fair comparisons, the rankings have been divided into three peer groups. Gujarat secured the highest position among large states, followed by Maharashtra and Tamil Nadu. Uttarakhand topped the Hilly and North-Eastern States category, ahead of Assam and Himachal Pradesh. Among Union Territories and city states, Goa ranked first, followed by Delhi and Chandigarh.

This peer-group approach takes into account differences in geography, administrative structures and economic size, allowing states to benchmark themselves against jurisdictions with similar characteristics.

State profiles highlight strengths and reform priorities

The report includes detailed profiles for every state and Union Territory, outlining their performance across each of the eight pillars while identifying strengths, challenges and opportunities for improvement. These profiles also incorporate investor feedback to reflect the on-ground business experience alongside measurable policy indicators.

NITI Aayog said the index is designed not simply as a ranking exercise but as a practical reform tool that can guide governments in strengthening their investment ecosystems over time. By encouraging states to learn from one another and adopt proven best practices, the initiative aims to improve India's competitiveness, attract greater domestic and foreign investment, generate employment and support sustainable long-term economic growth.