Background
Proposed following the 9th Governing Council Meeting of NITI Aayog (2024), where the Prime Minister called for an Investment-Friendly Charter.
Announced in the Union Budget 2025–26.
Developed to support the vision of Viksit Bharat @2047 by creating stronger State-level investment ecosystems.
Recognises that while the Centre provides the policy framework, States play a crucial role in attracting investments through infrastructure, governance, and regulatory efficiency.
What is IFI?
A data-driven index that benchmarks how effectively States and UTs attract, facilitate, and sustain investments by evaluating their policy, regulatory, institutional, and infrastructure ecosystem.
Features
Covers 28 States and 8 Union Territories.
Based on 84 indicators using:
Secondary data.
Investor perception surveys.
Enables benchmarking, peer learning, and targeted policy reforms.
Eight Pillars
Infrastructure
Business Climate
Resources
Government Policy
Regulatory Ease
Institutional Environment
Financial Health
Environmental Resilience
Performance Categories
Top Performers – Score above 50
Frontrunners – 45–50
Emerging Performers – 40–45
Aspiring States – Below 40
Top Performers (Overall)
Gujarat
Maharashtra
Tamil Nadu
Goa
Odisha
Peer Group Classification
To ensure fair comparison, States are grouped into:
Large States
Hilly & North-Eastern States
Union Territories & City States
Significance
Promotes competitive and cooperative federalism.
Encourages State-level reforms and ease of investment.
Helps identify best practices and policy gaps across States.
Improves transparency and predictability for investors.
Enhances India's attractiveness for domestic and foreign investment.
Supports Viksit Bharat @2047 and Viksit Rajya @2047.
Challenges
Major differences in infrastructure and institutional capabilities between states.
Differences in governance and implementation of policies.
Investor perception can be subjective in nature.
Quality of data and regular updating are difficult.
States which perform poorly will not have the resources to implement reforms.
Balancing industrialisation and environmental sustainability.
Way Forward
Build capacities at institutions and administration in laggard States.
Emphasise digital governance and single-window clearance.
Promote peer learning through replication of successful experiences from high-ranking States.
Facilitate good logistics, industrial infrastructure, and availability of land.
Regular update of the Index through credible data.
Sustainability and resilience of investments in climate change policy.
Promote Centre-State cooperation to develop an environment for investment.
Conclusion
The Investment Friendliness Index (IFI) is a valuable instrument for strategic reforms as it not only ranks states but also guides them in developing an investment ecosystem. The index, through fostering healthy competition, policy-making based on evidence, and cooperative federalism, can improve domestic and foreign investments, create employment opportunities, and speed up the process of achieving Viksit Bharat @2047.
