NITI Aayog’s Investment Friendliness Index 2026: Rankings, Methodology, and Investor Takeaways
Gujarat has topped NITI Aayog’s first Investment Friendliness Index 2026, followed by Maharashtra, Tamil Nadu, Goa, and Odisha. The index compares all 28 states and eight Union Territories based on their ability to attract, support, and retain private investment.
The Investment Friendliness Index evaluates more than simple business approvals. It examines infrastructure, government policies, regulatory processes, financial health, institutional capacity, access to resources, and environmental resilience.
For retail investors, the rankings offer a useful view of where future factories, logistics networks, industrial clusters, and private-sector projects may develop. However, the index should be treated as an economic screening tool, not as a direct signal to buy stocks based in a particular state.
What Is the Investment Friendliness Index?
The National Institution for Transforming India (NITI) Aayog released the first Investment Friendliness Index (IFI) on July 17, 2026.
The index was developed to measure how effectively Indian states and Union Territories (UTs) create and maintain an environment that supports investment. It aims to encourage competitive federalism, where states compare their performance, learn from stronger peers, and introduce reforms to attract businesses.
The idea originated at NITI Aayog’s ninth Governing Council meeting in July 2024. The Union Budget 2025-26 subsequently announced the development of a state-level investment friendliness index.
Unlike rankings that focus only on the ease of obtaining licences, the IFI examines the wider investment lifecycle. This includes finding land, accessing electricity and transport, securing approvals, hiring workers, operating a business, and dealing with state institutions.
Investment Friendliness Index 2026 Rankings
Five states and UTs scored above 50 and entered the “Top Performers” category.
| Overall rank | State or UT | IFI score | Performance category |
| 1 | Gujarat | 56.6 | Top Performer |
| 2 | Maharashtra | 53.7 | Top Performer |
| 3 | Tamil Nadu | 53.3 | Top Performer |
| 4 | Goa | 53.1 | Top Performer |
| 5 | Odisha | 52.4 | Top Performer |
No state crossed 60 on the 100-point scale. This suggests that even the leaders have substantial room to improve their regulatory systems, infrastructure, institutions, and investor experience.
NITI Aayog divided the states and UTs into four performance groups:
| Category | Score range | Number of states and UTs |
| Top Performers | Above 50 | 5 |
| Frontrunners | 45 to 50 | 15 |
| Emerging Performers | 40 to below 45 | 8 |
| Aspiring States | Below 40 | 8 |
The index also uses peer groups so that states with very different economic and geographical conditions are not compared without context.
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Leaders within each peer group
- Large states: Gujarat, Maharashtra, and Tamil Nadu
- Hilly and North-Eastern states: Uttarakhand, Assam, and Himachal Pradesh
- City states and Union Territories: Goa, Delhi, and Chandigarh
Uttarakhand scored 47.5, Assam scored 47.1, and Himachal Pradesh scored 45.3. Among city states and UTs, Goa was followed by Delhi at 49.5 and Chandigarh at 48.3.
How Is the Investment Friendliness Index Calculated?
The IFI assesses states through 84 indicators grouped under eight broad pillars. It combines publicly available secondary data with findings from an investor perception survey.
The assessment reportedly included responses from more than 1,850 active investors and consultations with 165 stakeholders. This combination helps the index compare formal policies with the experiences of businesses operating on the ground.
The eight pillars of the IFI
| Pillar | What it broadly measures |
| Infrastructure | Roads, ports, airports, railways, logistics, electricity, and digital connectivity |
| Business climate | Industrial activity, market depth, exports, innovation, and private investment |
| Resources | Availability of land, labour, skills, raw materials, and other productive inputs |
| Government policy | Investment policies, incentives, promotion programmes, and policy predictability |
| Regulatory ease | Speed, transparency, and efficiency of approvals and compliance systems |
| Institutional environment | Administrative capacity, governance quality, and implementation effectiveness |
| Financial health | Fiscal deficit, debt, revenue strength, and the state’s ability to fund development |
| Environmental resilience | Sustainability, climate preparedness, renewable energy, and resource management |
The framework is designed to measure both a state’s existing economic strengths and the quality of the systems that enable future investment.
Why Did Gujarat Rank First?
Gujarat received the highest overall score of 56.6. Its position reflects the combined strength of its industrial ecosystem, ports, transport infrastructure, power availability, exports, and relatively predictable investment policies.
The state has developed manufacturing clusters in industries such as chemicals, pharmaceuticals, automobiles, engineering, textiles, and petroleum products. Its coastline and port network also give export-oriented industries easier access to international markets.
However, Gujarat’s score of 56.6 is not overwhelmingly higher than those of Maharashtra and Tamil Nadu. The narrow difference indicates that India has several competitive investment centres rather than one dominant destination.
What Helped Maharashtra and Tamil Nadu?
Maharashtra ranked second with 53.7. Its advantages include a large and diversified economy, access to financial markets, major urban centres, industrial infrastructure, and strong private-sector activity.
Mumbai’s position as India’s financial centre strengthens the state’s access to capital, professional services, and corporate decision-makers. Maharashtra also has established clusters in automobiles, pharmaceuticals, engineering, information technology, financial services, and media.
Tamil Nadu ranked third with 53.3. It has a broad manufacturing base covering automobiles, auto components, electronics, textiles, engineering, renewable energy, and industrial machinery.
Its network of ports, industrial corridors, suppliers, and skilled workers makes it attractive to manufacturers that need a mature supply chain rather than only tax incentives.
Why Goa and Odisha Stand Out
Goa’s fourth-place finish is notable because it is much smaller than the leading industrial states. It ranked first among city states and UTs, with strengths reportedly including regulatory ease, infrastructure, human resources, and environmental indicators.
Odisha ranked fifth with 52.4. Its natural resources, industrial policies, fiscal position, and established presence in metals and mining helped it enter the Top Performers group.
Odisha’s ranking also shows that investment friendliness is not limited to states with the largest cities or financial markets. Resource availability, government finances, infrastructure development, and policy execution can improve a state’s competitiveness.
What Does the Index Mean for Retail Investors?
The investment friendliness index can help investors understand the conditions surrounding companies, sectors, and capital expenditure projects. It should not, however, be used as a standalone stock-selection model.
Identify sectors that may benefit from state-level investment
Improving investment conditions can support demand for:
- Industrial construction and engineering
- Cement and building materials
- Power generation and transmission
- Ports, railways, roads, and logistics
- Warehousing and industrial real estate
- Banking and project finance
- Capital goods and electrical equipment
- Manufacturing and export-oriented businesses
A state that simplifies approvals or improves logistics may attract new projects, creating opportunities for companies that build or supply those projects.
Examine a company’s geographical exposure
Investors can check annual reports, investor presentations, and exchange disclosures to understand where a company operates.
For example, a company may have factories, warehouses, mines, ports, or major customers in a high-ranking state. A supportive investment environment may reduce delays, improve infrastructure access, or make future expansion easier.
Geographical exposure is still only one consideration. Profitability, debt, management quality, competitive position, valuation, and cash flow remain more important for deciding whether a stock is attractive.
Watch the direction of change
The first edition provides a baseline, but future editions may be more useful to investors.
A state that moves rapidly from an aspiring or emerging position into the frontrunner group may be undertaking meaningful reforms. These improvements could appear before they are fully reflected in new factories, employment, tax collections, or corporate earnings.
The rate of improvement may eventually offer more insight than the absolute rank.
Limitations of the Investment Friendliness Index
No composite index can capture every factor influencing an investment decision.
It is not a measure of guaranteed investment returns
A high IFI score does not mean every company operating in that state will perform well. Businesses can still face weak demand, high debt, poor management, or expensive valuations.
State-level scores can hide sector differences
A state may be excellent for automobiles but less suitable for data centres, pharmaceuticals, tourism, or renewable energy.
Karnataka illustrates this limitation. Although it did not enter the top-performing group, it remains a major technology, startup, and Foreign Direct Investment (FDI) destination. Some ecosystem strengths may not be fully reflected in a broad composite ranking.
Existing advantages can influence the rankings
States with ports, large cities, established industrial clusters, and decades of infrastructure development begin with structural advantages.
New reforms may take years to affect investment flows and economic outcomes. The first edition therefore measures current readiness more clearly than recent reform momentum.
Policies and implementation may differ
A state may announce attractive incentives, but execution determines whether investors receive approvals, land, utilities, and support on time.
Investors should examine completed projects, actual capital expenditure, regulatory timelines, and company disclosures instead of relying only on policy announcements.
How Could the Index Influence State Policies?
The IFI gives state governments a common framework for identifying weaknesses and comparing themselves with similar states.
Lower-ranked states may use the findings to:
- Make approvals more transparent and time-bound.
- Improve industrial land records and availability.
- Expand reliable electricity and digital connectivity.
- Strengthen transport and logistics networks.
- Reduce unnecessary compliance requirements.
- Improve the financial health of state governments.
- Build more capable investment-promotion institutions.
- Increase policy stability and communication with businesses.
The index could also encourage states to share successful practices rather than competing only through subsidies. Better infrastructure, governance, and regulatory certainty are usually more sustainable than short-term financial incentives.
Read More: How Economic Indicators Influence Stock Market Movements
Key Takeaways
Gujarat leads the Investment Friendliness Index 2026 with a score of 56.6, followed by Maharashtra, Tamil Nadu, Goa, and Odisha.
The index covers 84 indicators across eight pillars and combines secondary data with investor feedback. Its main purpose is to help states identify reform priorities and create more transparent, efficient, and predictable investment environments.
For retail investors, the IFI can support macroeconomic and sector research. It may help identify regions likely to attract factories, infrastructure, and private capital. It should always be combined with company fundamentals, industry conditions, project execution, and valuation analysis.
Future editions could become especially valuable by showing which states are improving consistently and whether higher scores translate into actual investment, jobs, and corporate activity.
Read More: India’s Goldilocks Moment: Key Insights from the Economic Survey 2025-26
Frequently Asked Questions (FAQs)
Q: What is the Investment Friendliness Index?
A: The Investment Friendliness Index is a NITI Aayog framework that compares Indian states and Union Territories based on how effectively they attract, enable, and sustain private investment.
Q: Which state topped the Investment Friendliness Index 2026?
A: Gujarat topped the 2026 index with a score of 56.6. Maharashtra ranked second with 53.7, and Tamil Nadu ranked third with 53.3.
Q: How many indicators are included in the index?
A: The index uses 84 indicators grouped under eight pillars, including infrastructure, business climate, resources, government policy, regulatory ease, institutional environment, financial health, and environmental resilience.
Q: Is the Investment Friendliness Index useful for stock investors?
A: Yes, it can help investors understand state-level economic conditions, infrastructure prospects, and potential capital expenditure activity. However, it is not a stock recommendation and should be combined with company-specific research.
Q: Does a high IFI ranking guarantee higher investment inflows?
A: No. A high ranking indicates a supportive investment ecosystem, but actual inflows also depend on sector opportunities, project execution, market demand, business strategy, and broader economic conditions.
Q: Why are states placed in separate peer groups?
A: Peer groups account for differences in geography, economic size, and administrative structure. Comparing a large industrial state directly with a small Union Territory or a hilly state may otherwise produce misleading conclusions.
Disclaimer
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