Verdict: Gujarat is India's most investor-friendly state, scoring 56.6 out of 100 in NITI Aayog's inaugural Investment Friendliness Index (IFI), released 17 July 2026. Maharashtra (53.7) and Tamil Nadu (53.3) round out the top three among large states. But the headline finding is starker than the ranking: no state crossed 60, meaning every Indian state has significant room to improve its investment climate.
Last verified: 2026-07-30 · Gujarat 56.6 | Maharashtra 53.7 | Tamil Nadu 53.3 | Goa 53.1 | Odisha 52.4 · Only 5 of 36 states/UTs scored above 50 ("Top Performer") · Pillars scored: 84 indicators across 8 categories · Survey base: 1,850+ investors, 165 stakeholders
What Is NITI Aayog's Investment Friendliness Index?
The Investment Friendliness Index (IFI) is a government-built benchmarking tool that scores every Indian state and union territory on how effectively they attract, facilitate, and sustain investment. NITI Aayog released the first edition on 17 July 2026, covering all 28 states and 8 union territories across 84 indicators grouped under 8 pillars: Infrastructure, Business Climate, Resources, Government Policy, Regulatory Ease, Institutional Environment, Financial Health, and Environmental Resilience (PIB, 17 Jul 2026).
The index was conceived after Prime Minister Narendra Modi directed NITI Aayog to create an investment-friendly charter for states at the 9th Governing Council Meeting in 2024. It was formally announced as a reform tool in the Union Budget 2025-26 (PIB).
It is positioned as an indigenous replacement for the World Bank's Ease of Doing Business report, which was permanently discontinued in September 2021 after an investigation found data irregularities in its 2018 and 2020 editions (World Bank Statement, 16 Sep 2021).
How Did Each State Score?
Among 17 large states, Gujarat led with 56.6, followed by Maharashtra at 53.7 and Tamil Nadu at 53.3. Odisha placed fourth at 52.4. Only five states and UTs scored above 50 to qualify as "Top Performers": Gujarat, Maharashtra, Tamil Nadu, Goa, and Odisha (Business Standard, 17 Jul 2026).
States were sorted into four performance bands:
| Band | Score Range | Number of States/UTs |
|---|---|---|
| Top Performers | Above 50 | 5 |
| Front Runners | 45-50 | 15 |
| Emerging Performers | 40-45 | 8 |
| Aspiring States | Below 40 | 8 |
The bottom of the table reveals the depth of regional disparity: Lakshadweep scored 24.5 and Ladakh 27.0, more than 32 points behind Gujarat. The gap between the top and bottom is wider than the gap between some global economies (Drishti IAS, 20 Jul 2026).
Category-specific leaders
NITI Aayog also ranked states within three peer groups to account for differences in geography and scale:
| Peer Group | 1st | 2nd | 3rd |
|---|---|---|---|
| Large States (17) | Gujarat | Maharashtra | Tamil Nadu |
| Hilly & North-Eastern (12) | Uttarakhand | Assam | Himachal Pradesh |
| City States & UTs (7) | Goa | Delhi | Chandigarh |
Source: PIB
Why Did Gujarat Win?
Gujarat's 3-point lead over Maharashtra is not a fluke. It reflects structural advantages that have been compounding for over a decade across multiple pillars of the index.
Business facilitation and labour stability
Gujarat's single-window investor facilitation system, run through the Industrial Extension Bureau (iNDEXTb), provides end-to-end clearance for approvals and no-objection certificates within a time-bound framework. Restrictions on strikes in essential services have kept industrial relations stable, directly boosting investor confidence in project timelines (NationPress, 18 Jul 2026).
Infrastructure and logistics
Gujarat holds the country's highest estimated expressway length at 635 kilometres. Nearly 7% of India's entire railway network passes through the state. The state accounts for roughly 10% of India's state highway network — about four times the national average for a single state. Industrial hubs like Dholera Special Investment Region, GIFT City, Sanand, Dahej, Jhagadia, and Saykha function as plug-and-play ecosystems that reduce project implementation time (NationPress).
Power costs and supply reliability
Industrial electricity tariffs in Gujarat are nearly 29% below the national average. Industries receive an average of 23.8 hours of daily power supply, among the most reliable in the country. Gujarat's infrastructure pillar score of 13.7 out of 25 was the highest among large states, driven by fast port turnaround times and reliable power (Business Standard; NationPress).
Fiscal discipline
Gujarat recorded a fiscal deficit of 2.81% of GSDP in FY2024 — the lowest among all assessed states. Its outstanding liabilities stood at roughly 18% of GSDP, nearly 40% below the major-state average. This fiscal prudence signals to investors that the state can sustain infrastructure spending without crowding out private capital (NationPress).
Economic fundamentals
Gujarat contributes approximately 31% of India's merchandise exports. Its per capita GSDP of ₹2,64,232 is about 67% above the major-state average. The state has established 614 Atal Tinkering Labs as of FY2025, or 1.24 labs per lakh people — nearly 19% above the major-state average (NationPress).
How Do the Runners-Up Compare?
No single state dominates every pillar. Each top performer has distinct strengths, and the index reveals that leadership shifts sharply depending on what is being measured.
| State | Score | Standout Strength |
|---|---|---|
| Gujarat | 56.6 | Infrastructure (13.7/25), fiscal discipline, power tariffs 29% below national avg |
| Maharashtra | 53.7 | Business climate (9.4/20), 35% of national PE/VC investment, most Atal Tinkering Labs |
| Tamil Nadu | 53.3 | Near-100% MoU conversion rate, strong export performance |
| Goa | 53.1 | Skilling/healthcare spend (8.3/15 on Resources), renewable power share |
| Odisha | 52.4 | Resources pillar (8.2/15), raw material access, fiscal position |
Sources: Business Standard; Drishti IAS
Maharashtra leads the Business Climate pillar with a score of 9.4 out of 20, driven by the highest share of private equity and venture capital investment (35% of the national total) and the largest network of Atal Tinkering Labs. Tamil Nadu has achieved a near-100% MoU conversion rate, meaning nearly every memorandum of understanding signed actually results in a grounded project — a metric that matters more to investors than headline summit numbers (The Hindu Business Line, Jul 2026).
What Are the 8 Pillars and Who Leads Each?
The index evaluates states across eight pillars with different maximum scores. Understanding which pillar each state excels at helps investors match their industry's needs to the right jurisdiction.
| Pillar | Max Score | Top Large State | Top Score |
|---|---|---|---|
| Infrastructure | 25 | Gujarat | 13.7 |
| Business Climate | 20 | Maharashtra | 9.4 |
| Resources | 15 | Odisha | 8.2 |
| Government Policy | 10 | Madhya Pradesh | 5.4 |
| Regulatory Ease | 12 | Chhattisgarh | 8.4 |
| Institutional Environment | — | Not detailed | — |
| Financial Health | — | Not detailed | — |
| Environmental Resilience | — | Not detailed | — |
Source: Business Standard
The pillar breakdown reveals critical insight: the state that wins overall is not the state that wins each category. An investor prioritizing regulatory speed might look at Chhattisgarh (8.4/12 on Regulatory Ease), which otherwise sits in the Front Runner band. An investor prioritizing resource access and skilled labour might consider Odisha's 8.2/15 Resources score, even though it ranks fifth overall.
How Is This Different From the World Bank's Ease of Doing Business?
The World Bank's Doing Business report ranked 190 countries on ten parameters (starting a business, construction permits, electricity, property registration, credit, minority investor protection, taxes, cross-border trading, contract enforcement, and insolvency). It was discontinued in September 2021 after an investigation found data irregularities in the 2018 and 2020 editions, allegedly manipulated to favor certain countries (World Bank, 16 Sep 2021).
Three key differences set the IFI apart:
- Scope: The World Bank ranked countries; the IFI ranks states within one country, where investment conditions vary more by sub-national jurisdiction than by nation.
- Methodology: The World Bank relied on expert assessments in two cities per country (India's scores were based on Mumbai and Delhi alone). The IFI surveyed over 1,850 investors and drew on input from 165 stakeholders across all states (PIB).
- Purpose: NITI Aayog has been careful to frame the IFI as a "reform tool, not a competition." As Vice Chairman Ashok Lahiri stated at the release: "This is not a ranking exercise... it was meant to inform states where they are performing well and where improvements are needed" (Business Standard).
What Does the Index Mean for Businesses Choosing Where to Invest?
The IFI is most useful as a diagnostic tool, not a single-number verdict. Here's how to read it depending on the type of investment:
For manufacturing and export-oriented projects: Gujarat's combination of 635 km of expressways, 7% of the national rail network, fast port turnaround times, and 29%-below-average power tariffs makes it the natural choice for capital-intensive, energy-heavy, and logistics-dependent operations.
For technology and startup ventures: Maharashtra's 35% share of national PE/VC investment and its large network of Atal Tinkering Labs signal that the ecosystem for private capital and innovation is deepest there. Tamil Nadu's near-100% MoU conversion rate means that if you sign an intent, the state follows through.
For resource-intensive industries (mining, metals, chemicals): Odisha's 8.2/15 Resources score and proximity to raw materials make it a strong candidate, even though it ranks fifth overall.
For investors evaluating fiscal risk: Gujarat's 2.81% fiscal-deficit-to-GSDP ratio and 18% outstanding liabilities tell you the state has the fiscal headroom to sustain infrastructure commitments without raising taxes or cutting services mid-project.
For investors who care about the full lifecycle: The index explicitly assesses the entire investment journey — from policy and governance to infrastructure, business facilitation, and fiscal management. A state's score on each pillar tells you where you might hit friction, not just whether you will.
What Are the Limitations of the Index?
The index has notable blind spots that businesses should understand before treating the score as gospel.
Investor perception bias: The index blends secondary data with a perception survey of 1,850 investors. Perception surveys tend to over-reward states with strong marketing and brand presence (Gujarat's Vibrant Gujarat summit is a case in point) and under-represent states where doing business is improving but not yet widely known.
Concentration risk invisible at state level: Gujarat's industrial dominance is geographically clustered around the Ahmedabad-Vadodara-Surat corridor. A state-level score of 56.6 does not mean a new factory in Kutch district enjoys the same infrastructure as one in Sanand. The index averages across regions within a state.
No outcome data: The index measures inputs (policies, infrastructure, investor perception) but not outputs (actual investment flows, employment generated, project completion rates). Tamil Nadu's near-100% MoU conversion rate is an exception — most states' conversion rates are not publicly benchmarked.
Reporting quality vs. reality: As critics of the World Bank index noted, states that are better at reporting good numbers can score higher than states that are genuinely reforming but less effective at documentation. The IFI's mix of objective and perception data helps, but the risk persists.
No state crossed 60: This is arguably the most important finding. Gujarat's 56.6 means the best-performing state still has gaps in 43% of the assessment areas. The index sets a benchmark, but it also shows that India's investment climate, even at its best, has substantial room for improvement.
What This Means for You
If you are a business leader evaluating Indian states for investment: Use the IFI as a starting point, not a finish line. Match your industry's critical needs to specific pillar scores — a manufacturer should prioritize Infrastructure and Financial Health; a software firm should weigh Business Climate and Regulatory Ease. Visit the state, talk to peers on the ground, and verify that the single-window system actually works in practice, not just on paper.
If you are a policymaker in a lower-ranked state: The peer-group ranking is your roadmap. Compare your state's pillar-level scores against peers in your band, identify the two pillars where you have the greatest gap, and focus reform energy there. The index is designed for this — NITI Aayog explicitly calls it a reform tool.
If you are an investor tracking India's growth story: The IFI is now part of the competitive federalism architecture underpinning the Viksit Bharat @2047 vision. India's investment rate stood at 29.9% of GDP in FY25, far below the 40%+ rates that Japan, South Korea, and China achieved during industrialization. The World Bank estimates India needs ~7.8% average real GDP growth over two decades to reach high-income status by 2047. State-level investment reform is the lever, and the IFI is the dashboard (Drishti IAS).
If you are watching India's broader industrial policy: This index joins a growing stack of state-level assessments — from the Employment Linked Incentive scheme targeting 3.5 crore jobs, to the semiconductor push building India's path to a global top-4 position by 2032, to the emerging debate on who profits from India's physical AI data boom. The common thread is that India's industrial future is being shaped at the state level, and the centre is now measuring it systematically.
FAQ
Q: What is NITI Aayog's Investment Friendliness Index? A: It is the first edition of a government ranking that scores all 28 Indian states and 8 union territories across 84 indicators grouped under 8 pillars, covering the full investment lifecycle from policy and governance to infrastructure, business facilitation, and fiscal management. Gujarat topped the inaugural edition with a score of 56.6 out of 100.
Q: Which states topped the Investment Friendliness Index 2026? A: Gujarat ranked first with 56.6, followed by Maharashtra at 53.7 and Tamil Nadu at 53.3, all among large states. Goa topped the city-states and UTs group at 53.1, and Uttarakhand led the hilly and north-eastern states category.
Q: Why did no state score above 60 out of 100? A: The index uses 84 indicators across 8 pillars covering the entire investment lifecycle. No state performed strongly on all pillars, indicating that even the best-ranked states have significant gaps in areas like environmental resilience, institutional capacity, or regulatory ease that pull their composite scores below the 60 mark.
Q: How is this index different from the World Bank's Ease of Doing Business report? A: The World Bank ranked countries using expert assessments in major cities, while the IFI ranks Indian states using secondary data plus a perception survey of over 1,850 investors. The World Bank report was discontinued in September 2021 after data manipulation was found in its 2018 and 2020 editions. The IFI is designed as a reform tool for sub-national improvement, not a global country ranking.
Q: What are the 8 pillars of the Investment Friendliness Index? A: The eight pillars are Infrastructure, Business Climate, Resources, Government Policy, Regulatory Ease, Institutional Environment, Financial Health, and Environmental Resilience. Each pillar carries different maximum weights, with Infrastructure worth 25 points and Government Policy worth 10.
Q: How can businesses use the index to choose where to invest? A: Businesses should match their industry's critical needs to specific pillar scores rather than relying on the composite ranking alone. A manufacturer should prioritize states with high Infrastructure and Financial Health scores, while a technology firm should weigh Business Climate and Regulatory Ease. The state-level score averages regional variation, so on-the-ground verification remains essential.
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