NITI Aayog on Friday released its first-ever 'Investment Friendliness Index', positioning Gujarat and Maharashtra as the top-performing large states in attracting and sustaining investments. The index, covering all 36 states and Union Territories (UTs), scored each on a 1–100 scale, with only five jurisdictions crossing the 50-point threshold.
Index Structure and Methodology
The index, announced by Finance Minister Nirmala Sitharaman in the 2025-26 Union Budget, evaluates states and UTs on eight pillars spread across 90 indicators: infrastructure, business climate, resources, government policy, regulatory ease, institutional environment, financial health, and environmental resilience. Notably, the index incorporated perceptions from 1,850 investors, according to NITI Aayog.
States and UTs were grouped into three categories — large states, hilly and northeastern states, and city states & UTs — and further classified as top performing (score >50), frontrunners (45–50), emerging performers (40–45), and aspiring states (less than 40).
Top Performers by Category
The following table summarises the leading scores in each category:
| Category | Top Performer | Score | Runner-up | Score |
|---|---|---|---|---|
| Large states | Gujarat | 56.6 | Maharashtra | 53.7 |
| Hilly & northeastern | Uttarakhand | 47.5 | Assam | 47.3 |
| City states & UTs | Goa | 53.1 | Delhi | 49.9 |
Other states scoring above 50 in the large-states category include Tamil Nadu and Odisha (exact scores not specified in the source). Among hilly and northeastern states, Himachal Pradesh placed third with 46.1 points. In the city states and UTs segment, Chandigarh ranked third with 47.1.
Key Drivers for Leading States
According to the index, Gujarat’s top score was driven by efficient port operations, a favourable business climate, and a competitive power sector. Maharashtra excelled on the back of its ability to attract significant private equity/venture capital (PE/VC) investments and strong economic indicators.
Expert Commentary and Implications
Ashok Lahiri, Vice Chairperson of NITI Aayog, emphasised that investors make location-specific decisions based on factors including infrastructure quality and efficiency, regulatory certainty, institutional effectiveness, and availability of skilled human resources. He cautioned against viewing the index as a "pure race" among states, calling it an indicator to understand performance and scope for improvement. "The geopolitical situation has enough volatility, but the time to act is now, not tomorrow or later," Lahiri said.
The index release follows the last governing council meeting of NITI Aayog in June, where Prime Minister Narendra Modi urged states to heed investor feedback and focus on easing the compliance burden to position India as an attractive investment destination.
For corporate executives and investors, the index provides a data-driven framework to assess state-level investment climates, potentially influencing capital allocation and expansion strategies across India. The next milestone will be how states use the findings to reform policies and improve their scores in subsequent editions.
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