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.