NITI Aayog released its first-ever Investment Friendliness Index (IFI) 2026 on 17 July 2026, ranking all 28 states and 8 Union Territories on how well they attract and sustain private investment. Gujarat topped the index with a score of 56.6 out of 100, followed by Maharashtra and Tamil Nadu. The index is designed as a recurring reform tool to help states benchmark their investment ecosystems and identify policy gaps.
What Is the Investment Friendliness Index?
The Investment Friendliness Index (IFI) is a data-driven framework developed by NITI Aayog to assess, benchmark, and evaluate how effectively states and Union Territories create an environment conducive to attracting private investment. It is the first comprehensive index of its kind in India.
The idea for the index came from a directive by Prime Minister Narendra Modi during the 9th Governing Council Meeting of NITI Aayog in July 2024, where he called for an Investment-Friendly Charter. The Union Budget 2025-26 formally announced the development of the index. NITI Aayog, established on 1 January 2015 as a replacement for the Planning Commission, serves as the government’s premier policy think tank. It operates under the principle of cooperative federalism, with the Prime Minister as its Chairperson.
The IFI is not meant to be a one-time ranking exercise. NITI Aayog has positioned it as a continuous governance instrument that will be published periodically to track progress, encourage healthy competition among states, and support the vision of Viksit Bharat @2047.
How the Index Works: Pillars and Methodology
The IFI evaluates states and UTs across eight pillars that cover the full investment lifecycle. Each pillar is assigned a weight based on its relative importance.
| Pillar | Description |
|---|---|
| Infrastructure | Quality of physical infrastructure including ports, power, and logistics |
| Business Climate | Ease of doing business, market size, and private sector activity |
| Resources | Availability of natural resources, land, and skilled labour |
| Government Policy | Policy stability, incentives, and investment promotion efforts |
| Regulatory Ease | Single-window clearances, compliance burden, and regulatory processes |
| Institutional Environment | Quality of governance, institutional capacity, and dispute resolution |
| Financial Health | Fiscal discipline, debt management, and financial sustainability |
| Environmental Resilience | Environmental compliance, green infrastructure, and sustainability measures |
The framework uses 84 indicators in total, of which 62 are secondary data indicators drawn from official sources and 22 are perception-based indicators gathered from a survey of over 1,850 investors that generated 2,503 responses. The highest weight of 25% is assigned to the Infrastructure pillar, reflecting its critical role in investment decisions.
States and UTs are classified into four performance categories based on their scores:
| Category | Score Range | Number of States/UTs |
|---|---|---|
| Top Performers | Above 50 | 5 |
| Frontrunners | 45 to 50 | 15 |
| Emerging Performers | 40 to 45 | 8 |
| Aspiring States | Below 40 | 8 |
Who Tops the Rankings and Why
Gujarat secured the top position with an overall score of 56.6. The state performed strongly across infrastructure, business climate, financial health, regulatory ease, and government policy pillars. Its efficient port operations, competitive power costs, and well-managed transmission and distribution losses were key drivers. Gujarat’s long-standing focus on industrial policy and single-window clearance systems has made it a preferred destination for manufacturing and export-oriented industries.
Maharashtra ranked second with a score of 53.7. The state led in the business climate pillar, driven by a strong private equity and venture capital ecosystem, high innovation output, and robust economic indicators. Its large market size and financial sector depth, anchored by Mumbai as the country’s financial capital, contributed significantly to its score.
Tamil Nadu secured the third position with 53.3 points. The state performed strongly in infrastructure and business climate, supported by efficient port operations, strong export performance, and a nearly 100% Memorandum of Understanding (MoU) conversion rate that signals high investor confidence.
Goa and Odisha completed the top five overall performers, with Odisha showing particular strength in the resources pillar due to its mineral wealth and industrial policy.
Peer Group Rankings: Large States, Hilly States, and UTs
The index groups states into three peer categories to ensure fair comparison among entities with similar structural characteristics.
Large States
Among the 17 large states, Gujarat led the rankings, followed by Maharashtra, Tamil Nadu, Odisha, and Madhya Pradesh. At the bottom of this category were Bihar, Jharkhand, and West Bengal, which were classified as Aspiring States. These states face challenges related to infrastructure gaps, lower industrialisation, and weaker fiscal health.
Hilly and North-Eastern States
Uttarakhand topped this category, followed by Assam and Himachal Pradesh. These states face structural disadvantages such as difficult terrain, smaller markets, and higher logistics costs. Uttarakhand’s performance was driven by its industrial policy incentives and relatively better infrastructure among hill states.
City States and Union Territories
Goa led this category, followed by Delhi and Chandigarh. At the bottom of the overall rankings, Lakshadweep recorded the lowest score nationwide, followed by Ladakh and the Andaman and Nicobar Islands. These UTs face inherent constraints of remoteness, small market size, ecological sensitivity, and limited infrastructure.
Among large states, Bihar, Jharkhand, and West Bengal were the worst performers, classified as Aspiring States. Their low scores reflect gaps in infrastructure, industrialisation, fiscal health, and regulatory efficiency.
The Investment Imperative for India
The IFI report places the state-level rankings within the broader context of India’s growth trajectory. India recorded an average real GDP growth of 6.1% between FY1992 and FY2025. However, according to the World Bank, the country needs to achieve an average real GDP growth of 7.8% over the next two decades to become a high-income economy by 2047.
The report notes that investment has contributed to more than half of India’s economic growth since 1992. Currently, India’s investment rate stands at around 25% of GDP, significantly lower than China’s investment rate during its high-growth phase. NITI Aayog Vice Chairman Ashok Kumar Lahiri, a former Chief Economic Advisor who was appointed to the role in April 2026, emphasised that the index is not merely a ranking exercise but a diagnostic tool to help states identify where they can improve.
A striking finding is the concentration of investment. The top five states Maharashtra, Karnataka, Gujarat, Delhi, and Tamil Nadu together attract nearly 85% of India’s total FDI inflows. This highlights the wide gap between leading and lagging states and underscores the need for targeted policy interventions in underperforming regions.
Key Takeaways
- NITI Aayog released the first-ever Investment Friendliness Index (IFI) 2026 on 17 July 2026, covering all 28 states and 8 Union Territories.
- Gujarat topped the index with a score of 56.6, followed by Maharashtra (53.7) and Tamil Nadu (53.3).
- The index evaluates states across 84 indicators under eight pillars, with Infrastructure carrying the highest weight of 25%.
- The index was conceived at the 9th Governing Council Meeting of NITI Aayog in July 2024 and announced in the Union Budget 2025-26.
- Uttarakhand topped the Hilly and North-Eastern states category, while Goa led among City States and UTs.
- Lakshadweep recorded the lowest score nationwide, followed by Ladakh and the Andaman and Nicobar Islands.
- The top five states attract 85% of India’s total FDI inflows, highlighting severe regional concentration of investment.
