Subject: GS 2: Polity & Governance
Context: Recently, NITI Aayog has released the Investment Friendliness Index (IFI) 2026, a comprehensive framework to assess and benchmark the investment ecosystem across States and Union Territories.
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About Investment Friendliness Index (IFI)
- The Investment Friendliness Index (IFI) is a structured, data-driven framework developed by NITI Aayog to assess, benchmark, and evaluate how effectively India’s States and Union Territories create and sustain an environment conducive to attracting private investments.
- Origin: The Index was conceived following the Prime Minister’s direction at the 9th Governing Council Meeting of NITI Aayog (July 2024) and announced in the Union Budget 2025–26.
- Developed by: NITI Aayog
- Coverage: The Index covers all 28 States and 8 Union Territories.
- Methodology: The framework comprises 84 indicators, combining secondary data with investor perception surveys for a balanced assessment.
- Assessment Pillars: Performance is evaluated across eight pillars:
- Infrastructure
- Business Climate
- Resources
- Government Policy
- Regulatory Ease
- Institutional Environment
- Financial Health
- Environmental Resilience
Performance Categories: States and UTs are classified into:-
- Top Performers (>50)
- Frontrunners (45–50)
- Emerging Performers (40–45)
- Aspiring States (<40)
- Investor-Centric Approach: The report includes State Profiles integrating objective indicators with investor feedback to identify strengths, challenges and reform priorities.
- Reform Instrument: The IFI is envisaged as a strategic reform tool to improve investment competitiveness, attract domestic and foreign investment, and support Viksit Bharat @2047.
Key Findings
- Top Performers (Overall): Gujarat, Maharashtra, Tamil Nadu, Goa and Odisha emerged as the Top Performers.
- Peer Group Assessment: Separate rankings have been prepared for Large States, Hilly & North-Eastern States, and Union Territories/City States to enable contextual comparison.
- Hilly & North-Eastern States: Uttarakhand emerged as the top performer, followed by Assam and Himachal Pradesh.
- City States & Union Territories: Goa secured the first position, followed by Delhi and Chandigarh.
- Large States: Gujarat secured the first position, followed by Maharashtra and Tamil Nadu.
- Infrastructure Dominates: Infrastructure carries the highest weight (25%) in the Index, highlighting its critical role in determining investment attractiveness.
- Regional Investment Concentration: Maharashtra, Karnataka, Gujarat, Delhi and Tamil Nadu together account for nearly 85% of India’s total FDI inflows, indicating a high concentration of investments.
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18 Jul 2026
