Gujarat, Maharashtra, Tamil Nadu: the 3 states investors rank highest right now

Three states have separated themselves from the pack in a new national ranking of investor friendliness. NITI Aayog’s Investment Friendliness Index, released on Friday, puts Gujarat, Maharashtra and Tamil Nadu in the top three positions nationally — a result that comes from measuring every Indian state and Union Territory against eight distinct criteria rather than a single headline metric.

Those eight pillars are infrastructure, business climate, resources, government policy, regulatory ease, institutional environment, financial health and environmental resilience. NITI Aayog then split the country’s 28 states and eight Union Territories into three comparison groups — large states, hilly and northeastern states, and city states and Union Territories — so that, for instance, a small Union Territory isn’t judged on the same scale as a large industrial state.

Gujarat led both the large states group and the national rankings overall with a score of 56.6. Its strongest pillars were infrastructure, business climate, financial health, regulatory ease and government policy; the report noted resources, institutional environment and environmental resilience as areas where it still has ground to cover. The infrastructure score specifically reflected the efficiency of Gujarat’s ports and power sector, helped by competitive electricity tariffs for industrial and commercial users and well-managed transmission and distribution losses.

Maharashtra followed with a score of 53.7, driven chiefly by a strong business climate pillar and solid performances in resources and financial health, though infrastructure and regulatory ease were identified as weaker areas. Tamil Nadu came in third at 53.3, on the strength of its infrastructure and business climate scores, with financial health marked as needing improvement.

Further down the large states list, Odisha, Madhya Pradesh and Andhra Pradesh took the fourth, fifth and sixth spots, while Bihar, Jharkhand and West Bengal ranked lowest among large states. Uttarakhand, Assam and Himachal Pradesh led the separate hilly and northeastern states category.

NITI Aayog Vice Chairman Ashok Kumar Lahiri, who released the report, said India’s investment rate is currently around 25% of GDP, lower than China’s during its period of fastest economic expansion. He said reaching the government’s Viksit Bharat @2047 ambitions will require investments that expand productive capacity, strengthen manufacturing, create quality employment and foster innovation. The index itself was announced in the Union Budget for 2025-26 as a way to encourage reform and strengthen competitive and cooperative federalism among India’s states.

Mundra Port in Gujarat, part of the infrastructure strength behind the state’s top ranking. Wikimedia Commons/by Felix Dance