Gujarat Tops NITI Aayog’s First Investment Friendliness Index 2026

Prelims: NITI Aayog, Investment Friendliness Index (IFI), GSDP

Mains (GS III) Industrial Development, Ease of Doing Business, Competitive & Cooperative Federalise, Investment Promotion, Infrastructure Development, Fiscal Management, Innovation Ecosystem

Keywords: Investment Friendliness Index 2026, NITI Aayog, Gujarat, Maharashtra, Tamil Nadu, Ease of Doing Business, Investment Climate, Dholera SIR, GIFT City, Vibrant Gujarat Summit, Industrial Infrastructure, MSMEs, Fiscal Deficit, GSDP, Atal Tinkering Labs, Competitive Federalism, UPSC Economy

Why in News?

NITI Aayog has released the first-ever Investment Friendliness Index (IFI) 2026.
Gujarat ranked first among 17 major States with a score of 56.6, followed by Maharashtra (53.7) and Tamil Nadu (53.3).
The index assesses states on their ability to attract and sustain investments across the complete investment lifecycle.

Top Three States

Rank	State	Score
1	Gujarat	56.6
2	Maharashtra	53.7
3	Tamil Nadu	53.3

What is the Investment Friendliness Index (IFI)?

Released by NITI Aayog.
The Investment Friendliness Index 2026 evaluated 17 major Indian States, namely Andhra Pradesh, Assam, Bihar, Chhattisgarh, Gujarat, Haryana, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Punjab, Rajasthan, Tamil Nadu, Telangana, and Uttar Pradesh.
Based on 84 indicators grouped under 8 pillars covering the investment lifecycle.

Eight Assessment Pillars

Policy & Governance
Infrastructure
Business Facilitation
Fiscal Management
Land & Utilities
Regulatory Environment
Labour & Skills
Innovation & Industrial Ecosystem

Objectives

Promote Competitive Federalism.
Improve Ease of Doing Business.
Encourage policy reforms.
Identify best governance practices.
Help investors compare state-level business environments.

Why is this Index Significant?

Encourages healthy competition among states.
Guides policy reforms based on measurable outcomes.
Helps investors identify attractive investment destinations.
Supports India's manufacturing and economic growth ambitions.
Strengthens the vision of Viksit Bharat 2047 through state-led development.

Why Gujarat Ranked First

Policy Stability

Predictable and investor-friendly policy environment.
Strong governance with long-term policy consistency.

Single-Window Clearance

Industrial Extension Bureau (iNDEXTb) provides end-to-end investor support.
Time-bound statutory approvals and No Objection Certificates (NOCs).

Industrial Peace

Restrictions on strikes in essential services.
Minimal labour disruptions ensuring uninterrupted industrial operations.

Strong Industrial Infrastructure

Major industrial hubs include:

Dholera Special Investment Region (SIR)
GIFT City
Sanand
Dahej
Jhagadia
Saykha

Key Features

Plug-and-play industrial infrastructure
Faster project implementation
Lower setup costs
World-class industrial ecosystems

Role of Vibrant Gujarat Global Summit

Attracts large domestic and foreign investments.
Strengthens Gujarat's image as a global investment destination.
Facilitates government-industry partnerships.

Logistics & Connectivity

Accounts for nearly 10% of India's State Highway network.
Has the highest estimated expressway length (635 km) among states.
Nearly 7% of India's railway network passes through Gujarat.
Efficient logistics reduce supply-chain costs and turnaround time.

Competitive Power Sector

Industrial electricity tariffs are around 29% lower than the national average.
Industries receive 23.8 hours of daily power supply, above the average of major states.

Economic Performance

Contributes 31% of India's merchandise exports.
Recorded the third-highest GSDP growth during 2019–24.
Per capita GSDP: ₹2,64,232, about 67% higher than the average of major states.

Strong MSME Ecosystem

Large base of micro and small enterprises.
Supports employment geeration, exports and industrial diversification.

Fiscal Management

Indicator	Performance
Fiscal Deficit (2024–25)	2.81% of GSDP (Lowest among states)
Outstanding Liabilities	~18% of GSDP
Fiscal Position	Among the strongest in India

Innovation Ecosystem

614 Atal Tinkering Labs (ATLs) established by FY2025.
1.24 ATLs per one lakh population.
Nearly 19% above the average of major states.

Prelims MCQ

Q. With reference to the Investment Friendliness Index 2026, consider the following statements:

It is released by NITI Aayog.
It evaluates states based on 84 indicators under eight pillars.
Gujarat secured the first rank in the inaugural edition.

Which of the statements given above is/are correct?

A. 1 only
B. 1 and 2 only
C. 2 and 3 only
D. 1, 2 and 3

Mains Practice Question

"Competitive federalism has emerged as a key driver of investment-led economic growth in India." Discuss in the context of NITI Aayog's Investment Friendliness Index 2026.

FAQs

1. What is the Investment Friendliness Index (IFI)?

It is NITI Aayog's first comprehensive index measuring how effectively Indian states attract, facilitate and sustain investments.

2. Which state topped the Investment Friendliness Index 2026?

Gujarat ranked first with a score of 56.6, followed by Maharashtra and Tamil Nadu.

3. How many indicators are used in the index?

The index is based on 84 indicators grouped under eight assessment pillars.

4. What were Gujarat's major strengths?

Policy stability, investor-friendly governance, strong industrial infrastructure, efficient logistics, reliable power supply, fiscal discipline and a robust innovation ecosystem.

5. Why is the Investment Friendliness Index important?

It promotes competitive federalism, improves ease of doing business, attracts domestic and foreign investment, and encourages states to adopt best governance and economic practices.