Gujarat Tops NITI Aayog's Investment Friendliness Index, Lakshadweep Worst Performer

New Delhi: Gujarat has emerged as India’s most investment-friendly state, ranking ahead of Maharashtra and Tamil Nadu in the first edition of NITI Aayog’s Investment Friendliness Index, a new framework aimed at measuring how effectively states attract, facilitate and retain investments.

The index, unveiled as part of the Centre's broader push to improve the investment climate across states, evaluates not just the speed of regulatory approvals but also the wider ecosystem required for sustained economic activity. This includes infrastructure, logistics, skilled manpower, institutional capacity, fiscal strength, environmental resilience and policy predictability.

The initiative follows Prime Minister Narendra Modi’s call for an “Investment-Friendly Charter” during a NITI Aayog Governing Council meeting. The framework was subsequently announced in the Union Budget 2026-27, with the objective of encouraging states to strengthen key factors such as land availability, power supply, water access, clearances and business regulations.

Gujarat topped the rankings among large states with a score of 56.6, followed by Maharashtra at 53.7 and Tamil Nadu at 53.3. Overall, the top five states were Gujarat, Maharashtra, Tamil Nadu, Goa and Odisha.

Among hilly and northeastern states, Uttarakhand emerged as the best performer, followed by Assam and Himachal Pradesh. Goa led the Union Territories and city states category, ahead of Delhi and Chandigarh.

The rankings also highlight significant differences in investment preparedness among states. Odisha ranked fifth among large states with a score of 52.4, while Madhya Pradesh stood seventh with 48.9 points. Uttar Pradesh was placed 19th with 45 points, while Jharkhand and Bihar ranked 25th and 26th with scores of 41.3 and 41.2, respectively.

Gujarat’s top position was attributed to its strong performance across infrastructure, business conditions, financial health, regulatory systems and government policies. The report specifically highlighted the state’s port infrastructure, reliable electricity supply, industrial ecosystem and investor-friendly business environment.

Maharashtra’s second position was supported by its diversified economy, strong financial markets, private equity and venture capital ecosystem and innovation infrastructure. Tamil Nadu, meanwhile, benefited from its manufacturing strength, export performance, port connectivity and its ability to convert investment proposals into operational projects.

The index has been developed by NITI Aayog with CRISIL as its knowledge partner. It assesses states across eight pillars: infrastructure, business climate, resources, regulatory ease, government policies, institutional environment, financial health and environmental resilience.

The final framework comprises 84 indicators. These were selected after an extensive screening exercise that began with nearly 953 indicators drawn from global indices, government databases and academic research. The indicators were narrowed down through statistical analysis, expert consultations and discussions with central ministries, state governments, industry bodies, regulators, multilateral institutions, investment firms and other stakeholders.

The assessment also incorporates feedback from more than 1,850 investors and industry stakeholders. Their responses were used to assess practical experiences related to regulatory approvals, government responsiveness, institutional efficiency and the broader business environment.

NITI Aayog has said the index is intended to be more than a ranking exercise. It is designed as a reform tool that can help states compare their performance, identify gaps, learn from better-performing states and strengthen their investment ecosystems. For investors, the framework is expected to provide a more comprehensive comparison of investment conditions across different parts of the country.

The rankings come as India seeks to maintain the momentum in foreign capital inflows. Gross FDI inflows rose to a record $94.53 billion in FY26, compared with $71.28 billion in FY24, against the government’s broader target of attracting $100 billion in foreign investment.

Separately, Chhattisgarh has secured investment commitments worth nearly ₹973 crore from four textile and garment companies under its Industrial Development Policy 2024-30. The proposed investments include ₹528 crore from Saravana Mills and ₹235 crore from Swift Textiles, along with commitments from Puneet Creations and Drishti Designs LLP.

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