NITI Aayog has released the first Investment Friendliness Index (IFI) to assess the investment ecosystem across all 28 States and 8 Union Territories, with Gujarat emerging as the top performer.

The Investment Friendliness Index (IFI) provides an evidence-based framework to evaluate how effectively States create a conducive environment for businesses and investors.

What is the Investment Friendliness Index (IFI)?

• The Investment Friendliness Index (IFI) is a composite index developed by NITI Aayog to benchmark the investment ecosystem across States and UTs.
• The Index was announced in the Union Budget 2025–26 to strengthen competitive and cooperative federalism by encouraging reforms that improve the ease of doing business.
• It evaluates investment attractiveness using 84 indicators, based on secondary data and an investor perception survey.

Eight Assessment Pillars

The Index evaluates States and Union Territories on the basis of:

• Infrastructure
• Business climate
• Resources
• Government policy
• Regulatory ease
• Institutional environment
• Financial health
• Environmental resilience

State Categorisation

Based on overall scores, States and Union Territories have been classified into four performance categories:

● Top Performers-scores above 50
● Frontrunners-45–50
● Emerging Performers-≥40 – <45
● Aspiring States-below 40

Key Findings

• Gujarat, Maharashtra, Tamil Nadu, Goa, and Odisha emerged as the Top Performers.
• Among the Large States, Gujarat, Maharashtra, and Tamil Nadu secured the top three positions.
• Among the Hilly and North-Eastern States, Uttarakhand ranked first, followed by Assam and Himachal Pradesh.
• Among the UTs and City States, Goa, Delhi, and Chandigarh emerged as the top performers.
• States and Union Territories are classified into Top Performers, Frontrunners, Emerging Performers, and Aspiring States based on their overall scores.

Why is the Index Important?

• It promotes competitive and cooperative federalism by encouraging healthy competition among States.
• It helps governments identify policy gaps, improve governance and adopt best practices from high-performing States.
• It provides investors with a transparent assessment of the business environment across different regions.
• It supports national initiatives such as Make in India, Ease of Doing Business, Startup India, and the vision of Viksit Bharat 2047 by encouraging investment-led growth.

Exam Hook – Prelims

Q. With reference to the Investment Friendliness Index (IFI), consider the following statements:

1. It has been developed by NITI Aayog to assess the investment ecosystem across States and Union Territories.
2. The Index evaluates States using eight pillars, including infrastructure, regulatory ease and environmental resilience.
3. The Union Budget 2025–26 announced the development of the Investment Friendliness Index.

Which of the statements given above are correct?

(a) 1 and 2 only
(b) 2 and 3 only
(c) 1, 2 and 3 
(d) 1 and 3 only

One-line Wrap

The Investment Friendliness Index strengthens competitive and cooperative federalism by helping States build a more transparent, efficient and investor-friendly ecosystem, thereby supporting investment-led and inclusive economic growth.