Gujarat tops India’s new investment index: here’s what pushed it past Maharashtra

Gujarat has come out on top in a brand-new ranking of how investor-friendly India’s states really are. NITI Aayog released its Investment Friendliness Index for states and Union Territories on Friday, and Gujarat’s score of 56.6 was enough to put it ahead of every other large state in the country, with Maharashtra and Tamil Nadu following in second and third place.

The index was built to answer a question that matters directly to founders and companies scouting for a base: which states actually make it easy to set up, scale and run a business. NITI Aayog scored every state and Union Territory across eight pillars — infrastructure, business climate, resources, government policy, regulatory ease, institutional environment, financial health and environmental resilience — before grouping them into three separate buckets: large states, hilly and northeastern states, and city states and Union Territories.

Gujarat’s win wasn’t a one-category sweep. The report credited the state’s strong showing in infrastructure, business climate, financial health, regulatory ease and government policy, while flagging resources, institutional environment and environmental resilience as areas it still needs to work on. Its infrastructure score in particular stood out, driven by efficient ports and power supply, competitive electricity tariffs for industrial and commercial users, and well-managed transmission and distribution losses — the kind of unglamorous operational detail that matters enormously to a manufacturing or logistics business deciding where to set up shop.

Maharashtra’s second-place finish, with a score of 53.7, was carried mainly by its business climate pillar, alongside solid marks in resources and financial health; infrastructure and regulatory ease were called out as its weaker spots. Tamil Nadu, close behind at 53.3, earned its third-place finish through strong infrastructure and business climate scores, though NITI Aayog flagged financial health as an area needing improvement.

Releasing the report, NITI Aayog Vice Chairman Ashok Kumar Lahiri pointed to a bigger problem behind the exercise: India’s investment rate currently sits at around 25% of GDP, lower than China’s during its own period of rapid economic expansion. "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," Lahiri said, adding that hitting that goal will require a sharp acceleration in investments that expand manufacturing capacity and create quality jobs.

The Investment Friendliness Index itself traces back to the Union Budget for 2025-26, which announced its creation as a tool to sharpen competitive and cooperative federalism between states by rewarding reform and encouraging a more investment-friendly ecosystem nationally. It covers all 28 states and eight Union Territories.

Mundra Port, Gujarat’s largest private port and a major contributor to the state’s infrastructure score. Wikimedia Commons/by Felix Dance