Gujarat’s allocation to incentives as a percent of its State budget is the highest helping it score well in the government policy pillar
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Gujarat, Maharashtra, Tamil Nadu, Goa, and Odisha have emerged as the Top Performers in the Investment Friendliness Index, said a report released by Niti Aayog on Friday. Gujarat secured the top overall rank in this assessment because of its strong economic fundamentals, sound fiscal management, and business-friendly governance. The State has a high industry share of Gross Value Added (50.5 per cent), supported by key sectors such as petroleum refining, chemicals, and food processing, along with significant FDI inflows of $7.3 billion in FY24. The State also performed well on fiscal indicators, maintaining a low fiscal deficit, low outstanding liabilities and lower interest payments as a percentage of GSDP, reflecting prudent financial management. In addition, the State received positive stakeholder feedback for its policies and scored well on the ease of obtaining permissions and No Objection Certificates (NOCs) to start businesses. These strengths, combined with high data and survey scores, helped Gujarat achieve the highest overall ranking among all States.The report said Gujarat topped the overall rankings due to its strong performance in infrastructure, business climate, financial health, regulatory ease and government policies.The report added that the high rank in infrastructure is driven by its efficient port operations (lowest turnaround time weighted by capacity for major and nonmajor ports) and an efficient power sector, aided by competitive industrial and commercial power costs and well-contained T&D losses. The State offers consistently low power costs for industrial users at 29 per cent below the pan-India average.The State has 1.24 ATLs per lakh population, which is 19 per cent higher than the average of the large States category.Gujarat’s allocation to incentives as a percent of its State budget is the highest helping it score well in the government policy pillar. Gujarat ranks among the top 5 States in Business Climate, fuelled by a robust GSDP growth rate ranking 3rd overall over a 2019-2024 period. The State also stands out as one of the top States for its low financial risk because it had the lowest fiscal deficit as a percentage of GSDP (2.81 per cent) among States as of fiscal 2024.In addition, 15 States have been classified as Frontrunners, while eight States/UTs have been placed in Emerging Performers and Aspiring States categories, said the report titled “Investment Friendliness Index (IFI)”.investment friendlyThis comes after PM Modi, in 2024, assigned Niti Aayog with preparing an investment-friendly charter comprising key policies, programmes and processes required to attract investments. comprising key policies, programmes, and processes required to attract investments. Subsequently, the Budget 2025–26 announced the development of an Investment Friendliness Index to strengthen the spirit of competitive and cooperative federalism by promoting reforms and fostering a conducive investment ecosystem across States. Officials said the index is intended to serve as a tool for policymakers, investors and other stakeholders by providing comparative insights into the strengths and gaps in state-level investment climates. NITI Aayog expects the framework to support sustained collaboration between the Centre, States, industry and other stakeholders to make India a more attractive global investment destination.The assessment compares the investment ecosystems of States and Union Territories and is intended to help identify areas requiring policy improvements.The report highlighted the critical role played by State governments in attracting domestic and foreign investments through robust infrastructure, efficient regulatory systems, strong institutions and predictable policy frameworks. It notes that while national reforms provide the overall policy direction, State-level initiatives remain central to creating a favourable business environment.NITI Aayog said the index seeks to promote transparency, accountability and evidence-based policymaking while enabling States to benchmark their performance against peers. The exercise is expected to facilitate reforms that improve investor confidence and accelerate economic growth.Published on July 17, 2026
