Niti Aayog’s inaugural Investment Friendliness Index ranks states by infrastructure, policy, and business environment. Maharashtra, Gujarat, and Tamil Nadu dominate, collectively securing a massive share of India's foreign investment. This data highlights significant regional economic gaps, as the top five states alone account for roughly 85% of total foreign capital inflows.
Niti Aayog has released its first-ever Investment Friendliness Index for 2026, creating a roadmap for states to improve their appeal to both domestic and international investors. The index ranks states based on vital metrics, including infrastructure quality, government policy, and the overall business climate. Gujarat, Maharashtra, Odisha, Tamil Nadu, and Goa have emerged as the top-performing states in this initial assessment.
Infrastructure and Business Environment Rankings
Infrastructure development holds the highest importance in the index, accounting for 25% of the total score. In this critical area, Gujarat holds the top position, with Tamil Nadu and Kerala trailing close behind. Meanwhile, Maharashtra secured the lead in the business climate category, followed by Karnataka and Tamil Nadu. The index also highlights that states like Uttar Pradesh and Punjab are making notable appearances in the top ten across various business-friendly metrics.
FDI Concentration and Economic Divergence
The report brings a major structural issue to light: the extreme concentration of Foreign Direct Investment (FDI) in a few regions. Maharashtra, Karnataka, Gujarat, Delhi, and Tamil Nadu together attract nearly 85% of India’s total FDI. This gap is even more visible when looking at the northeastern states, which collectively receive less than 1% of the total foreign capital. For investors, this disparity explains why specific industrial corridors in western and southern India continue to see faster growth compared to other regions.
National Investment Trends
The broader economic data shows that India’s investment rate has remained resilient, staying above the decadal average of 29.1% to reach 29.9% of GDP in fiscal year 2025. While government and household spending have been the primary drivers of this growth, private capital spending has also shown signs of life, growing at 8.7%. However, the slower pace of private investment compared to public spending remains a key factor for the market to watch. Historically, sustained economic growth requires a consistent pickup in private spending, similar to the investment-led expansion seen in Japan’s post-war era.
As the Niti Aayog index gains traction, the focus will shift toward how states use these findings to refine their policies. Investors may monitor whether lower-ranked states initiate significant policy changes or infrastructure upgrades to improve their competitive standing, potentially opening up new industrial hubs beyond the current top-performing regions.