Gujarat and Maharashtra have secured the top spots in NITI Aayog's new Investment Friendliness Index, which ranks states on business, policy, and infrastructure. The index combines official data with feedback from 1,850 investors to assess how states attract private capital. This ranking helps investors identify states with better regulatory environments and operational efficiency for long-term projects.
NITI Aayog has launched its first 'Investment Friendliness Index,' providing a structured way for investors to compare the business environments across India’s 36 states and Union Territories. Released on Friday, the index evaluates states using 90 specific indicators, including infrastructure quality, government policy, financial health, and regulatory ease. Unlike traditional rankings that rely solely on government records, this assessment includes direct feedback from 1,850 investors to better reflect the real-world experience of setting up and running businesses.
Top Rankings and Performance Leaders
Gujarat earned the top rank with a score of 56.6, supported by its established port logistics, competitive electricity availability, and overall business climate. Maharashtra closely followed with a score of 53.7, standing out for its ability to attract significant private equity and venture capital. These two states, along with Goa, Tamil Nadu, and Odisha, were the only regions to cross the 50-point threshold in the national assessment.
For hilly and northeastern states, Uttarakhand led the category with a score of 47.5, followed by Assam at 47.3 and Himachal Pradesh at 46.1. Among the city states and Union Territories, Goa emerged as the leader with a score of 53.1, ahead of Delhi at 49.9 and Chandigarh at 47.1. States were grouped into performance bands ranging from top performers to aspiring states based on these scores.
What This Means for Investors
For market participants, this index serves as a tool to differentiate between states when companies plan new capital spending or manufacturing facilities. The inclusion of investor perception data is particularly relevant, as it highlights gaps between policy announcements and on-ground implementation. Investors often monitor factors like land acquisition, labor compliance, and state-level utility costs, all of which are reflected in the index's eight key pillars.
NITI Aayog Vice Chairperson Ashok Lahiri noted that while the index provides a performance snapshot, its core objective is to help state governments identify specific areas where they can simplify regulations and improve institutional efficiency. As states aim to compete for large-scale investments and manufacturing projects, the data in this index may influence future policy changes and state-level incentives. The next update to this index will be a key event for those monitoring how different state administrations progress in improving their regulatory environments over time.