Gujarat tops NITI's investment friendliness index; Maharashtra, Tamil Nadu follow

New Delhi: Gujarat, Maharashtra and Tamil Nadu have emerged as the top three states in NITI Aayog's Investment Friendliness Index for states and Union Territories released Friday.

The index is based on eight parameters including, infrastructure, business climate, environmental resilience and government policy.

As per the index, fifteen states were classified as frontrunners, including Delhi, Uttar Pradesh and Andhra Pradesh.

Niti Aayog vice chairman Ashok Kumar Lahiri said the investment rate in India is around 25% of the GDP which is less than China when its economy was growing fast and the country needs to increase investment as it boosts demand.

"In the last few years, India has been the fastest growing major economy. Investments play a major role in economic growth... it is not a useless thing," he said, adding that it is not only consumption but also investments that help to boost demand and overall economic growth.

As per the report, India's nominal GDP more than tripled to around ₹331 lakh crore in FY25 from almost ₹106 lakh crore in FY15.

"However, as per the World Bank data, net FDI inflow as a percentage of GDP reduced to 0.7% in CY2024 from 2.1% in CY2015. In the face of increasing global volatility, accelerating investment-led growth becomes even more crucial," it said.

The Union Budget 2025-26 had announced the development of an Investment Friendliness Index.

Lahiri said the index assesses current capabilities and future readiness. The report underscores that while national-level reforms provide the overarching policy direction for economic growth, states play a pivotal role in shaping the investment climate through robust infrastructure, efficient regulatory frameworks, effective institutions, and predictable policy regimes. "Strengthening these state-level investment ecosystems is essential for enhancing India's competitiveness, attracting greater domestic and foreign investment, and sustaining high economic growth," Niti Aayog said in a statement.

Factors such as availability of industrial land, quality of physical and digital infrastructure, regulatory efficiency, institutional capacity, and policy predictability are critical determinants of investment attractiveness. The index covers all 28 states and eight union territories and evaluates what makes a state attractive for investors, as well as the challenges investors face.

Resources, regulatory ease, institutional environment, and financial health are the other parameters on which the index is based. The index categorises states and UTs as large states, hilly and northeastern states, and city states and UTs.

Key performers

Gujarat topped the list with a score of 56.6 out of 100 based on its efficient port operations and competitive power sector that ensures reliable electricity and a favourable business climate. Maharashtra followed with a score of 53.7, excelling in attracting significant private equity/venture capital investments, along with the highest number of Atal Tinkering Labs supported by strong economic indicators.

While Gujarat was the top performer in terms of infrastructure and financial health in large states, Maharashtra topped business climate and Odisha- resources.