Key Details
The Investment Friendliness Index evaluates all 28 States and 8 Union Territories using 84 indicators, including investor perception surveys, to assess investment readiness across eight pillars.
Feature | Details |
|---|---|
Objective | Assess and improve the investment climate across all states and UTs through a common evidence-based framework. |
Coverage | All 28 states and 8 Union Territories. |
Assessment Framework | 8 pillars and 84 indicators, combining official data with investor perceptions. |
Evidence Base | 62 secondary indicators and 22 perception indicators based on feedback from 1,850 investorsgenerating 2,503 survey responses. |
State Categories | Large States; Hilly & North-Eastern States; City States & UTs. |
Performance Bands | Top Performers (>50), Frontrunners (45–50), Emerging Performers (40–45), Aspiring States (<40). |
Top Performers | Gujarat, Maharashtra, Tamil Nadu, Goa and Odisha. |
Purpose | Designed as a recurring index to benchmark reforms, identify policy gaps, encourage competitive and cooperative federalism, and improve investment outcomes over time. |
A New Framework for Strengthening India's Investment Climate
Recognising that robust investment-led growth will be essential to achieving Viksit Bharat 2047, NITI Aayog has developed the Investment Friendliness Index (IFI) to provide a systematic assessment of investment readinessacross India's States and Union Territories.
Rather than functioning only as a ranking exercise, the Index is intended to become a recurring reform frameworkthat enables governments to benchmark performance, identify implementation gaps and monitor progress over time. By combining administrative data with investor perceptions, it seeks to provide a more comprehensive understanding of the factors shaping investment competitiveness.
Investment Competitiveness Depends on Multiple Capabilities
The report emphasises that attracting investment requires more than industrial incentives or physical infrastructure.
Accordingly, the IFI evaluates states across eight pillars:
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
Together, these dimensions assess not only a state's ability to attract investment but also its capacity to sustain long-term economic activity through institutional capability, financial health and resilient governance.
States Build Investment Competitiveness Through Different Strengths
The Index demonstrates that investment competitiveness can be achieved through multiple development pathwaysrather than a single model.
Among the Top Performers, Gujarat leads overall through strong infrastructure, business climate, financial health and regulatory systems. Maharashtra benefits from its diversified industrial ecosystem and leadership in private equity and venture capital investment, while Tamil Nadu stands out for logistics infrastructure and export performance.
Among City States and Union Territories, Goa performs strongly through skilling, healthcare and regulatory ease. Within the Hilly and North-Eastern States category, Uttarakhand, Assam and Himachal Pradesh emerge as leading performers, each demonstrating different institutional strengths.
Investor Feedback Highlights Implementation Challenges
Alongside quantitative indicators, the Index incorporates feedback from 1,850 investors, providing insights into practical challenges affecting investment decisions.
Recurring concerns include logistics bottlenecks, industrial land availability, skilled workforce shortages, regulatory compliance and inter-agency coordination. The report notes that implementation quality remains a critical determinant of investor confidence.
A Tool for Continuous Reform
The report positions the Investment Friendliness Index as an ongoing governance instrument rather than a one-time assessment.
Recurring evaluations will enable states to monitor progress, compare performance with peers and adopt proven practices from better-performing jurisdictions. The Index seeks to strengthen competitive and cooperative federalismwhile supporting continuous improvements in India's investment ecosystem.
What Is the Investment Friendliness Index (IFI)?
The Investment Friendliness Index (IFI) is a benchmarking framework developed by NITI Aayog to assess investment readiness across India's States and Union Territories. It evaluates investment ecosystems using 84 indicators across eight pillars covering infrastructure, business climate, resources, government policy, regulatory ease, institutional environment, financial health and environment resilience. The Index combines quantitative indicators with investor perception surveys to help governments identify reform priorities and strengthen long-term investment competitiveness.
Policy Relevance
Introduces a national framework for benchmarking investment readiness across States and Union Territories using both administrative data and investor feedback.
Encourages states to move beyond policy announcements towards sustained improvements in infrastructure, governance, regulatory systems, institutional capacity and implementation quality.
Provides governments with recurring diagnostics to identify reform priorities, monitor progress over time and strengthen evidence-based policymaking.
Supports competitive and cooperative federalism by enabling states to benchmark performance and adapt successful practices from higher-performing jurisdictions.
Contributes to India's long-term objective of investment-led growth by strengthening the institutional foundationsrequired to attract and sustain private investment.
Follow the Full Report Here: NITI Aayog: Investment Friendliness Index 2025