NITI Aayog Launches Investment Friendliness Index

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The NITI Aayog recently introduced the first Investment Friendliness Index (IFI) to evaluate and boost business reforms across Indian states under the Viksit Bharat @2047 vision.

This index is an evidence-based assessment framework that checks how well local governments build and maintain a good business environment for private capital.
The index is developed and published by NITI Aayog.
Its main objective is to encourage competitive and cooperative federalism among Indian states and Union Territories.

The index covers all 28 states and 8 Union Territories across the country.
It measures overall investment attractiveness using eight specific pillars: infrastructure, business climate, resources, and government policy.
The evaluation also checks regulatory ease, institutional environment, financial health, and environmental resilience.

States and Union Territories are divided into four performance groups: Top Performers (above 50), Frontrunners (45 to 50), Emerging Performers (40 to 45), and Aspiring States (below 40).
The index groups regions into three categories based on geography and economic scale: Large States, Hilly and North-Eastern States, and Union Territories with City States.
The assessment incorporates direct responses gathered from 1,850 active investors.
Each state gets a dedicated diagnostic profile to compare its performance against regional peers.

Only five states scored above 50 points: Gujarat (56.6), Maharashtra (53.7), Tamil Nadu (53.3), Goa (53.1), and Odisha.
Gujarat performed best in port infrastructure, Maharashtra led in business climate and private investment, and Tamil Nadu excelled in manufacturing and exports.
Five regions including Maharashtra, Karnataka, Gujarat, Delhi, and Tamil Nadu attract 85% of India's FDI, while the North-Eastern states receive less than 1%.
Total investment reached 29.9% of GDP in FY2025, mainly driven by government spending on infrastructure and private housing.
Private capital expenditure stood at 8.7% of GDP and continued to lag behind public spending, highlighting the need to boost private investment.