Gujarat has secured the top position in NITI Aayog’s first-ever Investment Friendliness Index (IFI) 2026, emerging as India’s most investment-friendly state. Maharashtra and Tamil Nadu followed closely in the second and third spots, highlighting their strong business ecosystems and investment potential.
The newly launched index is designed to help states improve their investment climate by identifying strengths, addressing policy gaps, and learning from successful practices adopted by other states. Rather than focusing only on rankings, NITI Aayog says the exercise aims to encourage continuous reforms and better governance across the country.
Gujarat Leads the Rankings
Among India’s large states, Gujarat ranked first with a score of 56.6 out of 100. According to the report, the state’s strong performance was driven by efficient port operations, a competitive power sector, and a business-friendly environment that continues to attract investors.
Maharashtra secured the second position with a score of 53.7, backed by its strong private equity and venture capital ecosystem, innovation infrastructure, and overall economic strength.
Tamil Nadu came in third with a score of 53.3, thanks to its well-developed manufacturing sector, strong export performance, and robust infrastructure.
Rankings Across Other Categories
The report also evaluated hill states, North-Eastern states, Union Territories, and city states separately.
Among the hilly and North-Eastern states, Uttarakhand ranked first, followed by Assam and Himachal Pradesh.
In the category of Union Territories and city states, Goa topped the list, while Delhi and Chandigarh secured the second and third positions respectively.
How the Index Was Prepared
To prepare the Investment Friendliness Index, NITI Aayog conducted one of the country’s largest investor feedback exercises. The framework was developed after surveying more than 1,850 investors and incorporating inputs from 165 stakeholders.
The report combines publicly available data with investor perception surveys, giving policymakers both statistical evidence and real-world business feedback.
According to NITI Aayog, this approach helps governments understand not only where they perform well but also the areas where businesses feel improvements are needed.
Four Performance Categories
Instead of simply publishing rankings, the report groups states and Union Territories into four performance categories.
Five states have been classified as Top Performers, while 15 states and UTs have been placed in the Frontrunners category. This group includes states such as Delhi, Uttar Pradesh, and Andhra Pradesh.
Another eight states and UTs, including Punjab, West Bengal, Bihar, and Jammu & Kashmir, have been classified as Emerging Performers.
The remaining eight states and UTs, including Mizoram, Arunachal Pradesh, and Manipur, fall under the Aspiring States category.
What Makes a State Investment-Friendly?
The Investment Friendliness Index measures states on eight key pillars that determine how attractive they are for businesses and investors.
The highest weight is given to infrastructure (25%), followed by business climate (20%) and resources (15%).
Other important factors include regulatory ease (12%), government policy (10%), financial health (7%), institutional environment (6%), and environmental resilience (5%).
Together, these indicators provide a comprehensive picture of a state’s readiness to attract and sustain investments.
NITI Aayog: The Goal Is Improvement, Not Competition
Launching the report, NITI Aayog Vice Chairman Ashok Kumar Lahiri said the index should not be viewed as a race between states.
He explained that the purpose is to help governments identify areas where they are performing well and where reforms are needed. According to him, every state has strengths that others can learn from, whether it is Kerala, Madhya Pradesh, Odisha, or any other state.
He stressed that the focus should be on learning from each other’s best practices rather than celebrating rankings.
Helping States and Investors Make Better Decisions
The report also includes detailed profiles of every state. These profiles highlight each state’s economic indicators, sectoral strengths, investment advantages, and areas needing improvement.
NITI Aayog says these profiles will help governments benchmark their performance while giving investors a clearer understanding of each state’s business environment.
The report compares every state’s performance with the national average as well as the best-performing state under each assessment pillar, making it easier to identify opportunities for reform.
A Step Towards Stronger Economic Growth
According to NITI Aayog, the Investment Friendliness Index is meant to become a long-term reform tool that encourages better policymaking and stronger cooperation between governments and industry.
The report says that by acting on the findings, states can create a healthier business environment, attract more private investment, boost economic growth, and support balanced regional development.
Ultimately, the index aims to strengthen India’s investment ecosystem and contribute to the country’s broader vision of achieving Viksit Bharat through sustained economic development.
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