In NITI Aayog’s first-ever Investment Friendliness Index, Gujarat secured the top spot among India’s major states, followed closely by Maharashtra and Tamil Nadu.
Developed following the Union Budget to encourage states to systematically reduce regulatory barriers, the index evaluates states across 84 indicators spread over eight core pillars, including infrastructure, regulatory ease, and financial health. The relatively modest scores even for the top states underline that the index is designed to identify persistent reform gaps rather than certify absolute perfection.
1. The Top Three Competitors
The index divides India’s states and Union Territories into functional categories to maintain an equitable comparison. In the Large States category, three economic powerhouses set the pace:
| State | Overall Score (out of 100) | Core Structural Strengths |
| Gujarat | 56.6 | Port operations, fiscal health, and industrial infrastructure |
| Maharashtra | 53.7 | Private equity/venture capital (PE/VC) inflows and business climate |
| Tamil Nadu | 53.3 | High MoU conversion rate, export performance, and environmental resilience |
Rounding out the top five national performers across categories were Goa (which led the City-States/UTs category alongside Delhi) and Odisha (which topped the resource availability pillar).
2. Infrastructure and Governance Drivers in Gujarat
Gujarat’s top placement is anchored by a highly integrated industrial ecosystem and strong fiscal fundamentals:
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Industrial Hubs: Strategic nodes like the Dholera Special Investment Region (SIR), GIFT City, and Sanand offer plug-and-play facilities that drastically compress corporate setup timelines.
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Logistics & Power: The state holds 10% of India’s highway network and offers industrial electricity tariffs that are nearly 29% lower than the national average, alongside a reliable 23.8 hours of daily industrial power.
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Fiscal Discipline: Gujarat recorded a low fiscal deficit of 2.81% of GSDP, backed by outstanding liabilities that sit 40% below the average of other major states.
3. Pillar-Wise Leaders Across Large States
While Gujarat won the aggregate index, NITI Aayog’s sub-pillar analysis reveals that multiple states excel in distinct operational verticals:
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Business Climate: Maharashtra took the top position, driven by its unparalleled capacity to attract private equity and venture capital.
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Resources & Policy: Odisha ranked first in resource availability (land, labor, and skills), while Madhya Pradesh led in government policy alignment.
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Ease of Regulation: Chhattisgarh took the top spot for regulatory ease and institutional environment, showing significant progress in simplifying administrative workflows.
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Environmental Resilience: Tamil Nadu registered the highest score, balancing rapid industrialization with climate compliance.
4. The Macro Objective: Boosting Private Corporate Capex
Releasing the report, NITI Aayog emphasized that the index is a diagnostic framework rather than a simple race. Data shows that India’s post-pandemic capital expenditure recovery has been asymmetric:
Between FY22 and FY24, public sector and government investments grew by 13.9% in real terms, and household capital expenditure rose by 13.4%. Meanwhile, private corporate investment lagged behind at 8.7%.
By highlighting distinct operational bottlenecks through 22 perception-based indicators from 1,850 surveyed investors, the index aims to push states to cut red tape, accelerate demand, and unlock broader private corporate investment.
