Gujarat tops Niti Aayog's Investment Friendliness Index, Lakshadweep worst performer

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(UTs), as per a report released on Friday.

Lakshadweep was the worst performer followed by Ladakh and Andaman & Nicobar Islands.

The index focuses on eight parameters: infrastructure, business climate, resources, government policy, regulatory ease, institutional environment, financial health and environment resilience.

The rankings had three categories -- large states, hilly and northeastern states and city states and UTs, as per the report released by NITI Aayog Vice Chairman Ashok Kumar Lahiri.

Among large states, Bihar, Jharkhand and West Bengal were the worst performers. Odisha, Madhya Pradesh and Andhra Pradesh were ranked 4th, 5th and 6th among large states.

Gujarat leads the ranking, with an overall score of 56.6. The state’s score is driven by its strong performance across infrastructure, business climate, financial health, regulatory ease and government policy pillars, with areas of improvement in the resources, institutional environment and environment resilience pillars.

The report pointed out that Gujarat’s high rank in infrastructure is on account of its efficient port operations and power sector, driven by competitive industrial and commercial power costs and well-contained transmission and distribution (T&D) losses.

Maharashtra records an overall score of 53.7, ranking second in both the large state category and at the pan-India level.

The state’s score is driven by its leading performance in the business climate pillar, the Aayog said, adding that the score is further supported by a strong performance in the resources and financial health pillars, with infrastructure and regulatory ease areas for improvement.

Tamil Nadu records an overall score of 53.3, ranking third at the pan-India level and the large state category. The score is driven by its strong performance in the infrastructure and business climate pillar, with financial health emerging as an area for improvement.

Uttarakhand, Assam and Himachal Pradesh emerged as the top three states in hilly and northeastern states category.

Releasing the report, Lahiri said investment rate in India is around 25 per cent, which is less than China when its economy was growing fast.

" In the last few years, India has been the fastest growing major economy. Investments play a major role in economic growth. India needs more investments as it also boosts demand.

"As we aspire to realise the vision of Viksit Bharat @2047, our challenge is not only to sustain high rates of economic growth but also to ensure that such growth is broad-based, resilient and driven by productivity," he said.

Lahiri said achieving this ambition will require a significant acceleration in investments that expand productive capacity, strengthen manufacturing, create quality employment and foster innovation.

The index covers all 28 states and eight union territories (UTs) and evaluates what makes a state attractive for investors, as well as the challenges investors face.

The Union Budget 2025–26 announced the development of an Investment Friendliness Index to strengthen the spirit of competitive and cooperative federalism by promoting reforms and fostering a conducive investment ecosystem across states.