Quick answer: what is the Investment Friendliness Index 2026?
NITI Aayog released its first Investment Friendliness Index on 17 July 2026, scoring all 28 states and 8 Union Territories on 84 indicators across eight pillars. Gujarat topped with 56.6 out of 100, followed by Maharashtra, Tamil Nadu, Goa and Odisha. No state crossed 60 — which NITI treats as the report's central finding.
Syllabus mapping
- Prelims: NITI Aayog — nature, composition, Governing Council; the eight pillars and their weights; top performers and category leaders; other NITI indices; B-READY.
- Mains GS-2: Federal structure — cooperative and competitive federalism; the role of non-constitutional advisory bodies in shaping state policy.
- Mains GS-3: Resource mobilisation and investment; infrastructure; state fiscal health; industrial policy and the manufacturing ecosystem.
Why in news
On Friday, 17 July 2026, NITI Aayog released the first edition of the Investment Friendliness Index. It was launched by Vice Chairman Ashok Kumar Lahiri, with Crisil as knowledge partner under the Research Scheme of NITI Aayog.
Lahiri was unusually direct about what the exercise is not. "This is not a ranking exercise, this is not a competition," he said at the launch, adding that the purpose was to show states where they are doing well and where they are not. He also made the federal point plainly: "Investment will take place in states. The central government can do a few things. But much of what has to be done, has to be done by the states."
A note on dates: the report was released on 17 July 2026 and carries that publication date on the NITI Aayog website. Some later syndication and analysis pieces appeared through the following week, so you may see the index discussed under dates up to 24 July. Cite 17 July 2026 as the release date.
Background and core concept: why India needed a state-level investment index
Investment in India is not decided in New Delhi. Land acquisition, electricity supply and tariff, labour administration, water, state-level environmental clearance, single-window approvals, industrial parks, skilling — the levers determining whether a factory gets built and stays profitable sit largely with state governments. The Union can set FDI policy and the tax regime; it cannot deliver a plot with a connected substation in ninety days.
The origin story confirms the point. At the ninth meeting of the NITI Aayog Governing Council, the Prime Minister encouraged states to provide an investor-friendly environment and tasked NITI Aayog with preparing an investment-friendly charter of parameters. The Union Budget for fiscal 2026 then announced the preparation of an Investment Friendliness Index to further competitive and cooperative federalism.
What the index is trying to measure
Not investment received — that is an outcome, and outcomes are contaminated by history, geography and agglomeration effects. The index measures readiness: whether the conditions a firm needs are present, functioning and perceived to be present. A state can rank poorly here and still receive investment because of legacy clusters, and rank well while under-attracting because of distance from markets.
Key facts and figures
| Particular | Detail |
|---|---|
| Report | Investment Friendliness Index (first edition) |
| Released by | NITI Aayog; launched by Vice Chairman Ashok Kumar Lahiri |
| Release date | 17 July 2026 (a Friday) |
| Knowledge partner | Crisil, under the Research Scheme of NITI Aayog |
| Coverage | 28 states and 8 Union Territories (36 entities) |
| Indicators | 84 — of which 62 secondary-data and 22 perception-based |
| Indicators initially compiled | 953, later whittled down |
| Investor perception survey | 1,850 investors, 2,503 responses |
| Stakeholders consulted | 165 across industry bodies, regulators, ministries, sovereign wealth funds and PE firms |
| Pillars | 8 |
| Scale | Out of 100 |
| Highest score | Gujarat, 56.6 |
| Number crossing 60 | Zero |
The eight pillars and their weights
| Pillar | Weight | What it captures |
|---|---|---|
| Infrastructure | 25% | Road, rail, air and port capacity and efficiency; power reliability; digital readiness and 5G penetration |
| Business climate | 20% | GSDP per capita, exports-to-GSDP ratio, FDI inflows, innovation, business facilitation |
| Resources | 15% | Labour, skills, land, finance and renewable resource potential |
| Regulatory ease | 12% | Approvals, single-window systems, compliance burden |
| Government policy | 10% | Incentive design, R&D support, budget commitment to investment facilitation, disbursement speed |
| Financial health | 7% | Fiscal deficit and outstanding liabilities relative to GSDP, interest payments, capital expenditure |
| Institutional environment | 6% | Labour disruptions, economic offences, cybercrime, grievance redressal, official interference, policy predictability |
| Environment resilience | 5% | Climate and disaster exposure and the state's capacity to absorb it |
Two things stand out. Infrastructure at 25% is the single heaviest weight, which is an analytical statement in itself: NITI is asserting that hard capacity, not paperwork, is the binding constraint. And environment resilience appearing at all — even at 5% — is new. Older investment-climate frameworks treated climate risk as an externality; this one treats it as a determinant of where capital should locate.
Detailed explainer: the results
The four performance groups
States and UTs were bucketed by score, not by rank position:
- Top performers — score above 50. Five entities: Gujarat (56.6), Maharashtra (53.7), Tamil Nadu (53.3), Goa (53.1), Odisha (52.4).
- Frontrunners — score from 45 to 50. Fifteen entities: Andhra Pradesh, Assam, Chandigarh, Chhattisgarh, Delhi, Haryana, Himachal Pradesh, Karnataka, Kerala, Madhya Pradesh, Rajasthan, Telangana, Tripura, Uttarakhand and Uttar Pradesh.
- Emerging performers — score of 40 or above but under 45. Eight entities: Bihar, Jammu and Kashmir, Jharkhand, Meghalaya, Nagaland, Puducherry, Punjab and West Bengal.
- Aspiring states — score below 40. Eight entities: Andaman and Nicobar Islands, Arunachal Pradesh, Dadra and Nagar Haveli and Daman and Diu, Ladakh, Lakshadweep, Manipur, Mizoram and Sikkim.
Large states
Seventeen large states were assessed. Gujarat (56.6), Maharashtra (53.7) and Tamil Nadu (53.3) lead, followed by Odisha (52.4), Madhya Pradesh (48.9), and Andhra Pradesh and Karnataka tied at 48.7. Then Rajasthan (48.1), Chhattisgarh (47.5), Telangana (47.3), Haryana (47.1), Kerala (46.6), Uttar Pradesh (45.0), Punjab (44.7), West Bengal and Jharkhand (41.3 each) and Bihar (41.2).
Karnataka's result deserves a second look. The state hosting India's densest technology cluster sits at 48.7, outside the top performers. That is the index doing its job: a composite weighted 25% to infrastructure and 7% to financial health will not reward one outstanding sector.
Hilly and northeastern states
Twelve entities. Uttarakhand (47.5) leads, then Assam (47.3) and Himachal Pradesh (46.1). Tripura follows at 45.0, Meghalaya 43.0, Nagaland 41.2, Jammu and Kashmir 40.2, Mizoram 39.9, Arunachal Pradesh 37.5, Sikkim 36.6, Manipur 32.3 and Ladakh 27.0.
City states and Union Territories
Seven entities. Goa (53.1) leads, then Delhi (49.9) and Chandigarh (47.0), followed by Puducherry (44.9), Dadra and Nagar Haveli and Daman and Diu (37.1), Andaman and Nicobar Islands (30.2) and Lakshadweep (24.5). Delhi's 49.9 is the sixth-highest score nationally, fractionally short of the top-performer threshold — a good detail for a Prelims trap.
What actually drives the leaders' scores
Gujarat. Its infrastructure rank rests on port efficiency — the lowest turnaround time weighted by capacity across major and non-major ports — plus industrial power priced roughly 29% below the pan-India average with 23.8 hours of supply a day. It accounts for about 31% of India's merchandise exports, nearly twice the next highest state, and ranked third in GSDP growth over fiscals 2019 to 2024. Its fiscal deficit was 2.81% of GSDP in fiscal 2024, with outstanding liabilities near 18% of GSDP, about 40% below the large-state average. Its weaker pillars are resources, institutional environment and environment resilience.
Maharashtra. Its lead comes from the business climate pillar. It attracts 35% of India's private equity and venture capital investment — the highest share of any state — and hosts 1,033 Atal Tinkering Labs, about 10% of the national total. It has the highest state budget for skilling and ranks second in renewable resource potential. Its GSDP per capita of Rs 2,16,710 ranks only 11th among 36 entities, a reminder that aggregate size and per-capita prosperity are different things. Infrastructure and regulatory ease are flagged as areas for improvement.
Tamil Nadu. First among large states on infrastructure, third in port turnaround time weighted by capacity, with electricity downtime about 4% below the large-state average. It has the second-highest number of Atal Tinkering Labs in India and an MoU conversion rate of nearly 100% — arguably the most impressive single statistic in the report, given how many investment memoranda signed at state summits never become plants. Its export-to-GSDP ratio is 36% above the category average. Financial health is its weak pillar.
Uttarakhand leads the hilly and northeastern group on workforce entry rates, banking access and innovation — 1,637 patents filed in 2024, about 28% above the pan-India average. Assam scores on fiscal prudence, with interest payments at 2.8% of GSDP, and on education spending averaging 18% of its budget over fiscals 2019 to 2024 against a category average of about 12%. Himachal Pradesh scores on resources, with a female worker population share of 62.3% and a labour force participation rate of 63.3% against a category average of 48.0%.
Where the report contradicts itself: the same document states that Gujarat has the lowest fiscal deficit as a percentage of GSDP among the states (2.81% in fiscal 2024) and that Maharashtra has the lowest among large states (3.94% in fiscal 2024). Both cannot be true as worded, since Maharashtra is a large state. Quote the individual figures, which are internally consistent, and avoid repeating either superlative. Separately, some press reporting placed Himachal Pradesh at 45.3 where the report's own category table shows 46.1.
Multi-dimensional analysis
The ceiling, not the leaderboard, is the story
Gujarat scored 56.6. Bihar scored 41.2. The gap between them is 15.4 points. The gap between Gujarat and a hypothetical fully-reformed state is 43.4 points. Read that way, the index is not saying that some Indian states are investment-friendly and others are not. It is saying that no Indian state has yet built the investment environment it needs, and that the leaders have exhausted only about half the available reform space.
This is deliberate design. An index calibrated so that the leader scores 90 flatters the system and stops the conversation. One calibrated so that the leader scores 56.6 keeps it open. When you write about this report, open with the ceiling.
Competitive federalism and its limits
The index is a textbook instrument of competitive federalism — the idea that states improve faster when performance is measured, published and compared. NITI has built a portfolio of such instruments: the SDG India Index, the Composite Water Management Index, the School Education Quality Index, the Health Index, the Export Preparedness Index, the India Innovation Index and the Fiscal Health Index.
The limits deserve naming. Ranking pressure can produce indicator-chasing rather than reform. It can entrench advantage: a coastal state with deepwater ports outscores a landlocked one on the 25%-weighted infrastructure pillar regardless of governance quality, which is why the composite should never be read alone. And an index published by an advisory body with no fiscal levers depends entirely on reputational incentive.
There is also a cooperative reading. By publishing pillar-level diagnostics and state profiles, NITI turns the index into a technical assistance product: a state can see exactly which indicators dragged its score and what the leader did differently.
The infrastructure-weight argument
Assigning 25% to infrastructure and 12% to regulatory ease is a substantive claim about what constrains Indian investment. For two decades Indian reform discourse was dominated by regulatory-cost measurement — procedures, days, forms. This index quietly demotes that. Port turnaround time, electricity downtime, transmission and distribution losses and digital penetration carry more weight than approval counts. Given that logistics costs and unreliable power are the complaints Indian manufacturers actually voice, the reweighting looks defensible.
The fiscal dimension
Including financial health at 7% links state fiscal management to investment attractiveness, and the mechanism is real: a state running a wide deficit with heavy interest obligations has less room for capital expenditure on the roads, substations and industrial water supply the infrastructure pillar measures. The N.K. Singh FRBM Review Committee (2017) recommended a general government debt-to-GDP target of 60%, with 20% for states. Gujarat's outstanding liabilities near 18% of GSDP are the visible dividend of that arithmetic.
The concentration problem
The index does not resolve India's most stubborn investment fact: private capital clusters overwhelmingly in a handful of states — Maharashtra, Karnataka, Gujarat, Delhi and Tamil Nadu absorb the dominant share of equity inflows on DPIIT's own reporting — and the top performers here are largely those same states. The correlation cuts two ways. It validates the index as a measure of something real, and it warns that publishing the correlation may reinforce it, because investors read rankings. Whether benchmarking narrows or widens regional divergence depends on whether laggards get the resources to act on the diagnosis, not merely the diagnosis.
Comparative and global perspective
| Framework | Unit assessed | Notable feature |
|---|---|---|
| Investment Friendliness Index (NITI Aayog, 2026) | Indian states and UTs | 84 indicators, 8 pillars, mixes secondary data with an 1,850-investor perception survey; includes environment resilience |
| World Bank Doing Business | Countries | Discontinued in September 2021 after an internal review found data irregularities; India had risen to rank 63 in the 2020 edition |
| World Bank Business Ready (B-READY) | Countries | Successor to Doing Business, first edition released in 2024; assesses regulatory framework, public services and operational efficiency |
| DPIIT Business Reform Action Plan | Indian states and UTs | Assesses implementation of a defined reform checklist, with feedback from actual users of services |
| NITI Aayog Export Preparedness Index | Indian states and UTs | Sub-national benchmarking of export ecosystems — the closest methodological cousin of the IFI |
The lineage is clear. After the collapse of Doing Business, sub-national benchmarking became the more credible unit of analysis, because that is where the variance and the policy levers actually sit. India's Business Reform Action Plan was an early mover; the Investment Friendliness Index extends it from regulatory compliance to the full investment lifecycle.
Committee, court and expert views
The Advisory Committee. The index was overseen by a committee chaired by Pravin Srivastava, former Secretary, Ministry of Statistics and Programme Implementation, with Ashish Kumar, former Director General of the Central Statistics Office, Laveesh Bhandari of the Centre for Social and Economic Progress, and Dhrijesh Tiwari of the Development Monitoring and Evaluation Office. It guided indicator selection, survey method and sample size. Arvind Virmani, then a Member of NITI Aayog, contributed suggestions.
Ashok Kumar Lahiri, Vice Chairman, NITI Aayog: insisted at the launch that the exercise is not a competition, and stressed that investment happens in states, so most of the required action must come from state governments rather than the Centre.
The report's own framing: it describes the index as "intended to serve as a strategic reform instrument that enables governments to benchmark performance, identify policy gaps, learn from best practices and undertake continuous institutional improvement".
The caveat NITI itself records: the report carries a disclaimer that Crisil received financial assistance under the Research Scheme of NITI Aayog and that responsibility for the findings and methodology rests with Crisil, not NITI Aayog. That is an unusual degree of institutional distance for a flagship index, and worth a line in an evaluative answer.
Way forward
- Publish the indicator-level scorecards as machine-readable open data. A state planning department cannot act on a PDF. Releasing all 84 indicator values for all 36 entities as a downloadable dataset would let states, researchers and industry bodies run their own diagnostics and make the second edition's comparisons verifiable.
- Fix the perception-survey coverage gap before edition two. A survey of 1,850 investors across 36 entities averages roughly 50 responses per state, and investor presence is concentrated in the leading states. Stratified over-sampling in low-investment states would remove a bias that penalises the very states the index is meant to help.
- Tie a portion of central capital support to pillar-level improvement, not rank. Rewarding rank rewards states already ahead. Linking a slice of the Scheme for Special Assistance to States for Capital Investment to measurable movement on a state's own weakest pillar would convert information into incentive without punishing structural disadvantage.
- Make MoU conversion a headline indicator. Tamil Nadu's near-100% conversion rate exposes how weak the norm is elsewhere. Requiring every state to publish annually the value of investment memoranda signed at summits against the value actually commissioned would discipline a genre of announcement that currently has no accountability.
- Build the environment resilience pillar out from 5%. Climate exposure is already repricing industrial siting — flood risk at coastal estates, water stress in the Deccan, heat stress on construction. Deepening the pillar with forward-looking hazard and water-availability indicators would make the index useful for decisions with a twenty-year asset life.
- Institutionalise the index annually with a fixed release calendar and a methodology-change log. One-off indices die. Annual repetition with documented methodology changes, so year-on-year comparison stays valid, is what turned the SDG India Index into a document state governments actually prepare for.
Static and current linkage
- Laxmikanth, Indian Polity: NITI Aayog — creation by Cabinet resolution on 1 January 2015, composition, Governing Council, contrast with the Planning Commission; centre-state relations and the federal structure.
- Ramesh Singh, Indian Economy: chapters on Planning in India, Economic Reforms, and Investment Models — including the shift from Five Year Plans to the three-year action agenda and longer-term vision documents.
- Economic Survey and NCERT Class 11: investment, capital formation, infrastructure and state finances; gross fixed capital formation as a share of GDP; the Planning Commission and Five Year Plans; Liberalisation, Privatisation and Globalisation.
- FDI policy: automatic route and government route; administered by DPIIT under the Ministry of Commerce and Industry; foreign exchange transactions governed by FEMA, 1999.
- Fiscal framework: FRBM Act, 2003; state fiscal responsibility legislation; the N.K. Singh FRBM Review Committee, 2017; Finance Commission recommendations on state borrowing limits.
- Other NITI indices to revise together: SDG India Index, Composite Water Management Index, School Education Quality Index, Health Index, Export Preparedness Index, India Innovation Index, Fiscal Health Index, National Multidimensional Poverty Index.
Prelims pointers
- The Investment Friendliness Index is released by NITI Aayog; the first edition came out on 17 July 2026.
- Knowledge partner: Crisil, under the Research Scheme of NITI Aayog.
- Coverage: 28 states and 8 Union Territories — 36 in all.
- Number of indicators: 84 — 62 secondary-data and 22 perception-based.
- Number of pillars: 8.
- Highest-weighted pillar: Infrastructure, 25%. Lowest: Environment resilience, 5%.
- Pillar weights in order: Infrastructure 25, Business climate 20, Resources 15, Regulatory ease 12, Government policy 10, Financial health 7, Institutional environment 6, Environment resilience 5.
- Investor perception survey: 1,850 investors, 2,503 responses; 165 stakeholders consulted.
- Four categories: Top performers (above 50), Frontrunners (45-50), Emerging performers (40 to under 45), Aspiring states (below 40).
- Top performers: Gujarat 56.6, Maharashtra 53.7, Tamil Nadu 53.3, Goa 53.1, Odisha 52.4.
- Counts by group: 5 top performers, 15 frontrunners, 8 emerging performers, 8 aspiring states.
- Hilly and northeastern leaders: Uttarakhand 47.5, Assam 47.3, Himachal Pradesh 46.1.
- City states and UT leaders: Goa 53.1, Delhi 49.9, Chandigarh 47.0.
- Delhi is sixth overall at 49.9 — just below the top-performer threshold; Andhra Pradesh and Karnataka are tied at 48.7; the lowest scorer is Lakshadweep, 24.5.
- No state or UT crossed 60.
- NITI Aayog was set up on 1 January 2015 by a Union Cabinet resolution; it is neither constitutional nor statutory.
- The Prime Minister is Chairperson of NITI Aayog; Ashok Kumar Lahiri released this report as Vice Chairman.
- NITI Aayog replaced the Planning Commission, itself created by a Cabinet resolution in 1950.
- The index was announced in the Union Budget for fiscal 2026.
- The World Bank's Doing Business report was discontinued in September 2021; its successor is Business Ready (B-READY).
- Maharashtra attracted 35% of India's PE/VC investment and hosts 1,033 Atal Tinkering Labs.
Mains linkage
Probable question 1 (GS-2, 15 marks): "Indices published by NITI Aayog have become instruments of competitive federalism. Examine their effectiveness with reference to the Investment Friendliness Index, 2026."
Skeleton: NITI Aayog's nature as a non-statutory advisory body without fiscal levers → the logic of measurement-driven reform → the IFI's design (84 indicators, 8 pillars, geographical categorisation) → evidence that it works (state profiles, diagnostic value, Lahiri's framing) → limits (indicator-chasing, structural advantage, no enforcement, thin perception data in laggard states) → what would make it bite. Keywords: competitive federalism, cooperative federalism, benchmarking, reform instrument, Governing Council, reputational incentive.
Probable question 2 (GS-3, 15 marks): "Private investment in India remains concentrated in a few states. Analyse the causes and evaluate whether benchmarking exercises can reduce regional divergence."
Skeleton: The concentration fact and DPIIT evidence → causes (agglomeration, port access, power reliability, skilled labour pools, historical industrial policy) → what the IFI reveals about the mechanism, using pillar-level evidence such as Gujarat's port turnaround and Tamil Nadu's MoU conversion → why publishing rankings may reinforce concentration → what would actually redistribute (capital-expenditure support to weak-pillar states, freight corridor and port hinterland connectivity, skilling budgets) → judgement. Keywords: agglomeration economies, GSDP, gross fixed capital formation, regional divergence, infrastructure deficit.
Mains practice question with model answer structure
Q. "NITI Aayog's Investment Friendliness Index is better understood as a diagnostic than as a league table." Critically examine, with reference to its methodology and findings. (250 words, 15 marks)
Introduction (about 30 words): State the facts — first edition released 17 July 2026, 36 states and UTs, 84 indicators, 8 pillars, Gujarat top at 56.6 — and note Vice Chairman Lahiri's own statement that it is not a competition.
Body — the diagnostic case (about 80 words): No entity crossed 60, so the index measures distance from a standard rather than distance from each other; pillar-level state profiles identify specific gaps; geographical categorisation prevents unfair cross-comparison; the framing in the report itself as a strategic reform instrument; concrete diagnostic findings such as Gujarat's weakness in resources and environment resilience despite topping the table.
Body — where it still functions as a league table (about 70 words): Scores are published as ordered lists and the press reported it as a ranking; investors read rankings, which risks reinforcing existing concentration; category thresholds create sharp cliffs, with Delhi at 49.9 excluded from top performers by 0.1; a thin perception sample in low-investment states biases comparison.
Body — evaluation (about 40 words): Both readings are available because the design permits both. Its diagnostic value is real but depends on annual repetition, open indicator-level data, and some link between weak-pillar improvement and central capital support.
Conclusion (about 30 words): Measurement changes behaviour only when it is repeated, granular and consequential. The first edition delivers the granularity; the second must deliver the repetition, and policy must supply the consequence.
Key terms glossary
- Investment Friendliness Index (IFI): NITI Aayog's composite framework scoring Indian states and UTs out of 100 on their ability to attract and sustain private investment.
- Pillar: a weighted thematic group of indicators within a composite index; the IFI has eight.
- Perception-based indicator: a score derived from a survey of investors rather than from published data; the IFI has 22 of these out of 84.
- GSDP: Gross State Domestic Product — the total value of goods and services produced within a state in a year, the state-level analogue of GDP.
- Fiscal deficit: the excess of total government expenditure over total receipts excluding borrowings, usually expressed as a percentage of GDP or GSDP.
- Outstanding liabilities: the accumulated debt stock of a government, expressed here as a percentage of GSDP.
- Port turnaround time: the average time a vessel spends at a port from arrival to departure — a standard measure of port efficiency, weighted here by port capacity.
- MoU conversion rate: the share of investment memoranda signed at investor summits that actually translates into commissioned projects.
- Competitive federalism: the idea that publishing comparative performance data drives states to improve governance in order to attract capital, talent and recognition.
- Cooperative federalism: collaborative problem-solving between the Union and the states, of which NITI Aayog's Governing Council is the institutional expression.
- B-READY (Business Ready): the World Bank's successor framework to Doing Business, assessing the regulatory framework, public services and operational efficiency faced by firms.
Quick revision summary
- First-ever Investment Friendliness Index (IFI) released by NITI Aayog on Friday, 17 July 2026.
- Launched by NITI Aayog Vice Chairman Ashok Kumar Lahiri; knowledge partner was Crisil.
- Covers all 28 states and 8 Union Territories — 36 entities in total.
- 84 indicators across 8 pillars; 62 are secondary-data indicators and 22 are perception-based.
- Perception survey covered 1,850 investors yielding 2,503 responses; 165 stakeholders consulted.
- Pillar weights: Infrastructure 25%, Business climate 20%, Resources 15%, Regulatory ease 12%, Government policy 10%, Financial health 7%, Institutional environment 6%, Environment resilience 5%.
- Four performance groups: Top performers (above 50), Frontrunners (45-50), Emerging performers (40 to under 45), Aspiring states (below 40).
- Top performers (5): Gujarat 56.6, Maharashtra 53.7, Tamil Nadu 53.3, Goa 53.1, Odisha 52.4.
- Frontrunners number 15; emerging performers and aspiring states number 8 each.
- Three geographical categories: large states, hilly and northeastern states, city states and Union Territories.
- Large states led by Gujarat, Maharashtra, Tamil Nadu; hilly and northeastern by Uttarakhand (47.5), Assam (47.3), Himachal Pradesh (46.1); city states and UTs by Goa (53.1), Delhi (49.9), Chandigarh (47.0).
- No state or UT crossed 60 out of 100 — the index is designed to expose reform gaps, not certify success.
- Gujarat's edge: lowest port turnaround time weighted by capacity, about 31% of India's merchandise exports, and the lowest fiscal deficit at 2.81% of GSDP in fiscal 2024.
- Maharashtra attracted 35% of India's private equity and venture capital investment and has 1,033 Atal Tinkering Labs.
- Origin: the Prime Minister tasked NITI at the ninth Governing Council meeting with an investment-friendly charter; the index was announced in the Union Budget for fiscal 2026.
Frequently asked questions
What is the Investment Friendliness Index and who released it?
It is NITI Aayog's first structured framework for benchmarking how well Indian states and Union Territories create and sustain an environment for private investment. It was released on 17 July 2026 by NITI Aayog Vice Chairman Ashok Kumar Lahiri, with Crisil as knowledge partner under the Research Scheme of NITI Aayog.
How many indicators and pillars does the index use?
Eighty-four indicators grouped into eight pillars. Of these, 62 are drawn from secondary government and published data and 22 come from an investor perception survey. The eight pillars are infrastructure, business climate, resources, government policy, regulatory ease, financial health, institutional environment and environment resilience.
Which states are the top performers?
Five states scored above 50 and were classified as top performers — Gujarat (56.6), Maharashtra (53.7), Tamil Nadu (53.3), Goa (53.1) and Odisha (52.4). Fifteen states and UTs were frontrunners scoring between 45 and 50, eight were emerging performers and eight were aspiring states.
Why does NITI Aayog say this is not a ranking exercise?
At the launch, Vice Chairman Ashok Kumar Lahiri said explicitly that it is not a competition and that the purpose is to tell states where they are doing well and where they are not. The report describes the index as a strategic reform instrument enabling governments to benchmark performance, identify policy gaps and learn from best practices. Given that no state crossed 60, treating the exercise purely as a league table would miss its point.
Why are states grouped into three geographical categories?
Comparing Ladakh with Maharashtra on a single scale is not meaningful. The index therefore also reports performance separately for large states, hilly and northeastern states, and city states and Union Territories, so that each entity is assessed against peers facing broadly similar terrain, demographic and administrative constraints.
How is this different from the World Bank's Ease of Doing Business rankings?
The Doing Business report was discontinued by the World Bank in September 2021 after an internal review found data irregularities, and was succeeded by Business Ready (B-READY). Doing Business ranked countries; the Investment Friendliness Index ranks sub-national units within one country. It also folds in fiscal health and environment resilience, which the older regulatory-cost frameworks largely ignored.
Is NITI Aayog a constitutional or statutory body?
Neither. NITI Aayog was created by a Union Cabinet resolution on 1 January 2015, replacing the Planning Commission, which was itself set up by a Cabinet resolution in 1950. It is an executive think tank and advisory body with no power to allocate funds. The Prime Minister is its Chairperson and the Governing Council comprises Chief Ministers of all states, Chief Ministers of Union Territories with legislatures, and Lieutenant Governors of other Union Territories.
What is the single most useful analytical point from the index for a Mains answer?
That the top-ranked state scored only 56.6 out of 100. The distance between the leader and the ceiling is larger than the distance between the leader and the median. This reframes the finding from 'Gujarat is investment-friendly' to 'no Indian state has yet built an investment environment it should be satisfied with', which is a far stronger opening for an argument about reform.
Do sources agree on all the numbers in the index?
Mostly, but not entirely. The official report itself states both that Gujarat has the lowest fiscal deficit as a percentage of GSDP among the states at 2.81% and that Maharashtra has the lowest among large states at 3.94% in fiscal 2024 — statements that cannot both be true as worded. Some press reporting also gave Himachal Pradesh's score as 45.3, whereas the report's own figure for the hilly and northeastern category is 46.1. Quote the report's tabulated scores and avoid the disputed fiscal-deficit superlative.
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Sources
- [Primary] NITI Aayog, “Investment Friendliness Index (full report)”, 17 July 2026. Link
- [Primary] NITI Aayog, “Investment Friendliness Index 2026 — publication page”, 17 July 2026. Link
- Business Standard, “Gujarat tops the NITI Aayog's 1st investment friendliness index for states”, 17 July 2026. Link
- ThePrint, “Gujarat tops NITI Aayog's first Investment Friendliness Index, Maharashtra and Tamil Nadu follow”, 17 July 2026. Link
- The Financial Express, “Gujarat tops NITI investment index; Maharashtra, Tamil Nadu follow”, July 2026. Link
