Article: Gujarat topped NITI Aayog’s Investment Friendliness Index with a score of 56.6, edging out Maharashtra (53.7) and Tamil Nadu (53.3).
Why the index was released
The Union Budget for 2025-26 introduced the Investment Friendliness Index to spur “competitive federalism” – a push for states to outdo each other on policies that attract capital. India’s overall investment rate hovers around 25 percent, so governments feel the heat to lift that figure. The index evaluates eight pillars that together sketch a state’s business climate:
- Infrastructure
- Business climate
- Resources
- Government policy
- Regulatory ease
- Institutional environment
- Financial health
- Environmental resilience
How Gujarat earned the top spot
Gujarat’s lead comes from strong scores in five pillars: infrastructure, business climate, financial health, regulatory ease and government policy. Its ports rank among the country’s most efficient, and its power sector consistently delivers reliable supply – both critical for manufacturers and data-centre operators.
The runners-up
Maharashtra claimed second place largely because of its business climate. It also showed strength in resources and financial health.
Tamil Nadu secured third place thanks to strong infrastructure and business climate scores.
Regions that lag
Lakshadweep, Ladakh and the Andaman & Nicobar Islands sit at the bottom of the list.
What the ranking means for tech and startups
- Supply-chain reliability: Efficient ports and stable power, highlighted in Gujarat’s scorecard, lower operating expenses for hardware startups and logistics-heavy platforms.
The other side of the story
Critics say the index leans heavily on quantitative data that can hide on-the-ground realities. A state might score well on “regulatory ease” while still grappling with informal corruption or land-acquisition delays that are hard to capture. The methodology also overlooks sector-specific incentives some states offer to biotech or green-energy firms, which could skew the picture for niche startups.
What to watch next
Investors will likely track policy announcements from the lower-scoring states to see if they can close the gap.
Bottom line: Gujarat’s lead shows that reliable infrastructure, clear regulations and proactive policy can tilt the investment balance toward a state. For Indian tech founders, the index maps where paperwork is thin, power is steady and ports are ready – but the true test will be how quickly lagging states turn those scores into real-world support.