Choose Report Type
Publication Date
Report Upload
download
(10.06 MB)
vertical
Industry & Foreign Investment
PDF Text
Investment
Friendliness
Index
2026
Investment Friendliness Index
Disclaimer
Crisil has received financial assistance under the Research Scheme of NITI Aayog (RSNA) to prepare this
report. While due care has been exercised to prepare this report using data from various sources, NITI Aayog
does not confirm the authenticity of data and accuracy of the methodology used for research and preparation
of this report. NITI Aayog shall not be held responsible for findings or opinions expressed in this document.
That responsibility rests completely with Crisil.
Investment
Friendliness
Index
3 July 2026
4Investment Friendliness Index
Message from the Vice Chairman
Ashok Kumar Lahiri
Vice Chairman, NITI Aayog
India today stands at a pivotal moment in its development
journey. Over the past three decades, sustained economic
reforms have transformed the country into one of the world’s
fastest-growing major economies. 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.
Achieving this ambition will require a significant acceleration
in investments that expand productive capacity, strengthen
manufacturing, create quality employment and foster
innovation.
History demonstrates that nations have achieved
developed economy status with sustained investment-led
growth. Investment serves as the foundation of economic
transformation by creating productive assets, modernising
infrastructure, enabling technological advancement and
improving competitiveness. It facilitates the movement
of labour towards more productive sectors, strengthens
supply chains and enhances the efficiency of markets. Most
importantly, sustained investment creates the conditions
necessary for higher incomes, greater exports and long-term
prosperity.
Message 5
For India, manufacturing occupies a central place in this transformation. A vibrant
manufacturing sector generates large-scale employment, supports innovation,
deepens domestic value chains and enhances the country’s integration with global
production networks. Manufacturing also creates strong multiplier effects across
logistics, infrastructure, services, research and skill development. As global supply
chains undergo structural realignment, India has a unique opportunity to emerge as
a preferred destination for investment-led manufacturing. Realising this opportunity
requires an enabling ecosystem that inspires confidence among domestic and
international investors alike.
While the Government of India has undertaken significant reforms to improve the
national investment climate, the next phase of India’s growth will increasingly
be shaped by the competitiveness of its states and Union Territories. Investors
ultimately make location-specific decisions based on factors such as infrastructure
quality, regulatory certainty, institutional effectiveness, availability of skilled human
resources, logistics efficiency, financial stability, and the ease of establishing and
operating businesses.
States therefore occupy the forefront of India’s investment story, and strengthening
their investment ecosystems will be critical to achieving the national vision of
becoming a developed economy by 2047.
It is in this context that NITI Aayog has developed the Investment Friendliness
Index (IFI). The index has been conceived as a comprehensive and evidence-based
framework to assess the readiness of states and Union Territories to attract, facilitate
6Investment Friendliness Index
and sustain investments. More than a comparative ranking, the IFI is intended to
serve as a strategic reform instrument that enables governments to benchmark
performance, identify policy gaps, learn from best practices and undertake
continuous institutional improvement. By fostering healthy competition
alongside cooperative federalism, the index seeks to accelerate reforms that
strengthen India’s overall investment ecosystem.
The report is founded upon a rigorous research methodology that combines
quantitative indicators with extensive stakeholder engagement. The framework
has been developed following detailed consultations with central ministries,
state governments, industry associations, multilateral institutions, regulatory
bodies, investors, financial institutions, consulting organisations, export
promotion councils and subject matter experts. Their insights have helped shape
an assessment framework that reflects both policy intent and the practical
experiences of investors operating across diverse sectors and geographies.
The Investment Friendliness Index is intended to serve multiple stakeholders.
For policymakers, it offers a structured roadmap for prioritising reforms
and monitoring progress over time. For investors, it provides a transparent,
comparable and evidence-based assessment of investment conditions across
states and Union Territories, thereby reducing information asymmetry and
supporting informed investment decisions.
For researchers and development practitioners, it offers an analytical framework
for understanding the institutional determinants of investment competitiveness.
India’s aspiration to become a developed nation by 2047 will ultimately depend
Message 7
on its ability to mobilise productive investment at an unprecedented scale. Such
investment will not only expand manufacturing and industrial capacity but also
accelerate innovation, strengthen exports, generate quality employment and improve
living standards for millions of citizens. By helping states continuously strengthen
their investment ecosystems, the Investment Friendliness Index seeks to contribute
meaningfully towards this national endeavour.
I am confident that this report will serve as a valuable reference for governments,
investors, industry and researchers alike. More importantly, I hope it will inspire a
new generation of reforms that enhance India’s competitiveness, deepen cooperative
federalism and reinforce the country’s position as one of the world’s most attractive
investment destinations. Together, these efforts will strengthen the foundations of
a globally competitive manufacturing sector and help transform the vision of Viksit
Bharat @2047 into reality.
8Investment Friendliness Index
Message from the
former Vice Chairman
Suman Bery
Former Vice Chairman, NITI Aayog
Hon’ble Prime Minister during the 9th Governing Council
meeting of NITI Aayog emphasized the need for an Investment
Friendly Charter, which could involve modifying laws and
reforms related to clearances, licensing, and ensuring the
availability of land through land banks, electricity, and water,
as well as offering appropriate incentives and support to
attract investments.
In light of this guidance from the Hon’ble Prime Minister, an Investment Friendliness Index has been created to provide a structured approach for assessing and strengthening the investment reception of States. The index is designed to recognize individual strengths, identify areas that require improvement, and to encourage healthy and constructive competition among States. Through this approach, it supports state governments in consistently enhancing their investment ecosystems in line with evolving economic opportunities.
The Report titled “Investment Friendliness Index” for
States is intended to serve as a guiding document for the
domestic and global investor communities. It provides a
clear and accessible reference on the strengths and areas
for improvement of each State and Union Territory, enabling
investors to make informed decisions and supporting the
flow of investment in these regions.
Message 9
This index has been developed with the objective of offering a comprehensive
assessment of how effectively States foster an environment that supports
investment. It provides a robust and data-driven mechanism for evaluating the
extent to which States are able to aid, attract, and sustain investment activity.
The Index evaluates States on their performance across key pillars, including
business climate, institutional environment, financial health and infrastructure.
These pillars collectively comprise eighty-four indicators across eight broad areas.
A dynamic and supportive investment environment across States is essential for
accelerating India’s economic transformation. At the same time, it is important that
States balance economic ambition with administrative efficiency by attracting new
enterprises and capital while ensuring a regulatory environment that is reliable,
predictable and supportive of business activity.
The design and development of the Index has benefited from extensive consultations.
The insights and feedback of industry associations, multilateral institutions, Central
and State Governments, regulatory bodies, export promotion councils, consulting
firms, investment banks, private equity and venture capital firms, and sovereign
wealth funds have been fully incorporated.
The Index and accompanying report constitute an important step towards
measuring, assessing, and tracking foreign investment across India’s states through
a transparent and objective set of indicators and pillars. They are intended to
support policy makers and investors alike in advancing India’s long-term investment
and development goals.
10Investment Friendliness Index
Message from the former Member
Dr Arvind Virmani
Former Member, NITI Aayog
India’s investment landscape is evolving rapidly, with States
emerging as drivers of the country’s economic dynamism.
State governments today play an increasingly influential
role in shaping the business climate through their policies,
institutions and administrative practices. Their decisions
have a direct bearing on entrepreneurial activity, industrial
expansion, job creation, and the ability to integrate into both
domestic and global value chains. Strengthening State-level
investment ecosystems, job skilling and education quality
is therefore crucial for sustaining high growth and ensuring
that the benefits of development are widely shared.
One of the central challenges in investment promotion is
achieving the right balance between economic ambition
and operational efficiency. While States compete to attract
new enterprises and capital, it is equally important that the
regulatory environment remains reliable and predictable.
A supportive investment environment cannot rely solely on
incentives; it must rest on transparency, responsiveness, and
a long-term commitment to reducing friction for businesses.
A stable, investor-friendly ecosystem not only draws fresh
investment but also encourages reinvestment by existing
firms, which is a strong indicator of confidence in governance
and institutions.
Message 11
In recent years, many States have taken noteworthy steps to strengthen
their investment architecture, including digital reforms for approvals
and clearances, improvements in logistics and connectivity, and the
creation of specialised agencies and facilitation cells. At the same
time, the pace and depth of progress differ across States, making it
valuable to document learnings and highlight effective practices that
can be emulated.
The Investment Friendliness Index (IFI) has been developed with this
intent. It provides a comprehensive, data-driven charter to evaluate
how effectively States enable and support investment. By examining a
wide spectrum of indicators, both quantitative and qualitative, through
surveys, the IFI offers objective insights into the functioning of State-
level investment ecosystems.
Ultimately, the IFI and this report shall serve as a guide to investors
looking to invest in Indian States and Union Territories, while ensuring
that States are able to track their performance in attracting foreign
investment and take measures to improve the same.
12Investment Friendliness Index
Message from the former CEO
B. V. R. Subrahmanyam
Former CEO, NITI Aayog
India’s economic progress over the last decade has been both
decisive and transformative. The country has successfully
steered its development journey through prudent
policymaking, strategic infrastructure expansion, and a
steadfast commitment to long-term sustainability. These
efforts have strengthened the foundations of our economy
and positioned India as one of the world’s most dynamic
investment destinations. As the nation advances toward
the goal of Viksit Bharat 2047, outlined by Hon’ble Prime
Minister, maintaining strong and steady investment flows
will be essential to realising our shared national aspirations.
Investment plays a uniquely powerful role in shaping
economic outcomes due to its far-reaching multiplier
effects. A single investment unlocks value across multiple
layers, creating employment, generating demand for goods
and services, strengthening supply chains and stimulating
innovation ecosystems. As capital flows into high-potential
sectors such as infrastructure, manufacturing, digital
services, energy transition and R&D, it directly contributes
to increased productivity and improves the standard of living
for millions. The pathway to a prosperous and future-ready
India is therefore closely intertwined with the country’s
ability to consistently attract, retain and scale investments.
India’s investment environment has undergone significant
improvement in recent years. Encouragingly, both domestic
Message 13
and international investors have responded by committing resources across emerging
and traditional sectors alike.
While national-level interventions have significantly strengthened investor confidence,
States remain at the core of India’s growth story. Recognising the pivotal role of States
in accelerating the nation’s development, the concept of Viksit Rajya has emerged as
an essential pillar of the Viksit Bharat vision. Each State contributes distinct strengths,
priorities, and opportunities, shaping the national growth mosaic. Empowering States to
enhance competitiveness, attract capital, and accelerate industrial and innovation-led
growth will be key to realising the full economic potential of the country. Hon’ble Prime
Minister has repeatedly underlined the role of States in promoting investment and had
given a call to develop an Investment Friendliness Index.
The Investment Friendliness Index (IFI) has been developed with the purpose of
providing a comprehensive assessment of how effectively States foster an investment-
supportive environment. The index evaluates States based on their performance in key
areas, including infrastructure, business climate, both natural and human resources,
government incentives, regulatory ease, institutional environment, financial health and
environment resilience. The assessment is conducted not only using data from secondary
sources but also through surveys from relevant private sector stakeholders to capture
the true on-the-ground picture of each State. This report is a comprehensive analysis of
strengths and relative challenges of each State and UT.
I am confident that this report will empower States and UTs to formulate policies and
strategies for attracting further investments and will lead them on the path to Viksit
Bharat to achieve designated milestones.
14Investment Friendliness Index
Message from the
Programme Director
Ishtiyaque Ahmed
Programme Director – Industry and
Foreign Investment, NITI Aayog
India’s economic progress over the past decade has
been remarkable, positioning the nation among the most
attractive destinations for global investors. As India aims to
achieve its long-term growth objectives, the ability to attract
stable and diversified investments will play a decisive role.
The country’s investment climate has benefited significantly
from technology adoption, policy reforms, and infrastructure
expansion. Yet, the varying pace of improvements across
States underscores the need for a structured assessment of
State-level investment readiness.
The Investment Friendliness Index has been developed
against this backdrop. Over the last five years, India has
seen substantial gains in its digital infrastructure, logistics
development, and sector-specific incentives. At the same
time, investors continue to highlight challenges related to
approval timelines, land access and the availability of skilled
labour in high-value sectors. A systematic index therefore
becomes essential for understanding both the progress and
the gaps. States that have improved investment facilitation
mechanisms, such as single-window clearance systems,
dedicated investor grievance redressal units and plug-
and-play industrial facilities have reported higher capital
commitments and improved project execution speed. These
outcomes demonstrate that institutional responsiveness is
just as important as industrial capacity.
Message 15
The Investment Friendliness Index provides a data-backed lens to understand how
each State is positioned in this evolving landscape. By identifying comparative
strengths and areas requiring attention, the index complements national efforts
to foster regionally balanced growth. It is expected that the insights presented in
this report will support governments, industry associations and investors in making
informed strategic decisions and in aligning resources toward productive outcomes.
The Index and the report shall ultimately serve as an important metric for measuring
Indian States’ capability to attract foreign investment which will allow States and
UTs to develop frameworks and strategies for increasing investments and becoming
investor friendly regions globally.
The work carried out in the index underscores our shared resolve to promote
conducive business environments across India and ensure that the country’s growth
journey remains inclusive, competitive and resilient.
16Investment Friendliness Index
The development of the Investment Friendliness
Index for States was supported by an Advisory
Committee which provided strategic guidance
throughout the design and conceptualization
of the Index, contributing to indicator selection,
methodological refinements, and ensuring
alignment with investor perspectives and state-
level economic priorities.
The following section highlights the composition,
background and expertise of the Advisory
Committee members:
Shri Pravin Srivastava, Indian Statistical Service
(Retd.)
Shri Pravin Srivastava, a 1983-batch officer
of the Indian Statistical Service, served as the
Chief Statistician of India and Secretary, Ministry
of Statistics and Programme Implementation
(MoS&PI).
Shri Ashish Kumar, Indian Statistical Service
(Retd.)
A 1977-batch officer of the Indian Statistical
Service, Mr. Kumar served as Director of the UN
Statistical Institute for Asia and the Pacific, he is
also President of the Center of Data for Economic
Development and Chief Statistician at Pahle India
Foundation, New Delhi.
Dr. Shri Laveesh Bhandari, President CSEP
Dr. Laveesh Bhandari is President at the Centre for
Social and Economic Progress (CSEP). Dr Bhandari
has published widely on subjects related to
sustainable livelihoods, industrial, economic, and
social reforms in India, economic geography, and
financial inclusion.
Shri Dhrijesh Kumar Tiwari, ISS
Shri Dhrijesh Kumar Tiwari is an Indian Statistical
Service Officer of 1998 Batch. He is a Post
Graduate in Statistics. Currently, he is working
as Joint Secretary, Development Monitoring and
Evaluation Office (DMEO), NITI Aayog.
Shri Upendra Kumar Gupta, NITI Aayog
Shri Upendra Kumar Gupta is serving as a Deputy
Adviser (Industry and Foreign Investment) at NITI
Aayog where he has been associated for over 12
years.
The committee’s contributions were instrumental
in:
• Shortlisting indicators to ensure comprehen- sive yet focused coverage of key drivers of investment friendliness.
• Refining the pillar structure and weightages, providing analytical balance and methodolog- ical clarity.
• Recommending statistical tests and validation techniques that enhanced the rigor, credibility, and practical applicability of the Index.
• Sharing field-based perspectives and nuanced insights, which encouraged the team to think in new directions and incorporate aspects that reflect actual investor concerns.
We extend our sincere gratitude to the esteemed members of the Advisory Committee for their invaluable guidance, constructive insights, and continuous support during the development of this Index. With their profound expertise and extensive experience, they significantly enhanced the index’s robustness and relevance.
We deeply appreciate the time, effort, and
thoughtful deliberations the committee invested
across multiple rounds of review and discussion.
Their guidance significantly shaped the quality of
this work and ensured that the index stands on
strong analytical foundations.
Investment Friendliness Index
Advisory Committee
16
Message 17
Hon’ble Prime Minister during 9th Governing
Council meeting, encouraged States to provide
an investor-friendly environment and tasked
NITI Aayog to prepare an ‘Investment-friendly
Charter’ of parameters which would include
policies, programmes and processes to be put in
place for attracting investments. Subsequently,
during Union Budget for fiscal 2026, preparation of
Investment Friendliness Index was announced to
further the spirit of competitive and cooperative
federalism.
The Report on Investment Friendliness Index
is a collective effort. I am grateful to Hon’ble
Vice Chairman, NITI Aayog for his insights and
leadership anchoring this project. I am thankful
to Dr. Arvind Virmani, Hon’ble former Member,
NITI Aayog for giving his valued suggestions for
the preparation of this report. Observations and
guidance of CEO, NITI Aayog from time to time has
been of immense value in the culmination of the
report. I thank the senior leadership of NITI Aayog
for providing necessary directions for this project.
Support extended by Shri Amardeep Singh Bhatia,
Secretary, DPIIT, Ms. Himani Pande, Additional
Secretary, DPIIT and Shri Bhuvnesh Pratap Singh,
Deputy Secretary, DPIIT is acknowledged with
gratitude. Nielsen, our survey agency engaged
by DPIIT needs to be credited for conducting the
physical survey in a proper and time-bound manner.
The team from Nielsen under the guidance of DPIIT
has been instrumental in collecting relevant data
from the field across States and UTs.
This exercise involved rigorous analysis and
identification of indicators from various sources.
Those indicators were then analysed and finally
an exhaustive list of around 953 indicators was
compiled. In this regard, the efforts of internal
Sub- Groups led by Ms. Neha Nautiyal, Shri
Shoyab Ahmed Kalal, Shri Manoj Kumar Upadhyay,
Shri Harshit Mishra and Shri Abhishek Agarwal
respectively need special mention.
Advisory Committee chaired by Shri Pravin
Srivastava, Former Secretary, MoSPI included
Shri Ashish Kumar, Former, DG, CSO, Shri Laveesh
Bhandari, President & Senior Fellow, CSEP and Shri
Dhrijesh Tiwari, Joint Secretary, DMEO as members
and Shri Upendra Kumar Gupta as member-
secretary. This Committee provided guidance on
the entire statistical framework which included
identification of relevant indicators, method of
survey, sample size, design of questionnaire for
survey and interpretation of final outcomes. Their
contributions have helped immensely to give this
report its present shape.
Crisil has been the knowledge partner for this
project. The team from Crisil particularly Mr.
Pushan Sharma, Mr. Mohit Adnani, Mr. Jyotish
Menon and Mr. Nishaan Patel supported NITI Aayog
and helped in navigating complexities associated
with this project.
Finally, this endeavour would not have been
possible without the efforts of the team from
Industry & Foreign Investment Division. Since the
inception of this project, the efforts of the team
led by Shri Abhishek Mukherjee and comprising of
Shri Bhadraksh Bhargav, Ms. Pragya Bajpai, Shri
Shahid Qayoom, Shri Karun Gupta and Ms. Vrushali
Lokhande are acknowledged.
Acknowledgement
Ishtiyaque Ahmed
Programme Director (Industry & Foreign Investment)
NITI Aayog
17
18Investment Friendliness Index
Investment Friendliness Index
List of abbreviations used in the report
AQI Air Quality Index
Bcm Billion cubic metre
CFS Container freight stations
EOUs Export-oriented units
FDI Foreign direct investment
FY Financial year
GDP Gross domestic product
GII Global Innovation Index
GSDP Gross state domestic product
GSPI Global Soft Power Index
GST Goods and services tax
GVA Gross value added
IBC Insolvency and Bankruptcy Code
ICD Inland container depot
ICOR Incremental capital-output ratio
IILB India Industrial Land Bank
IMF International Monetary Fund
ITI Industrial Training Institute
MoU Memorandum of understanding
MSMEs Micro, small and medium enterprises
NCAER National Council of Applied Economic Research
NIMZs National Investment and Manufacturing Zones
NIRF National Institutional Ranking Framework
PCA Principal component analysis
PE Private equity
PLI Production Linked Incentive
POL Petrol, oil and lubricants
R&D Research and development
RBI Reserve Bank of India
18
Message 19
SEZs Special Economic Zones
STEM Science, technology, engineering and mathematics
T&D Transmission and distribution
USD United States dollar
UTs Union territories
VC Venture capital
WIPO World Intellectual Property Organization
List of figures
Figure 1:
India’s GDP and investment trajectory in the past 30 years 26
Figure 2: Roadmap 31
Figure 3: Eight pillars comprising the Investment Friendliness Index 32
Figure 4: Process followed for indicator selection/rejection 33
Figure 5: Stakeholders 34
Figure 6: Stakeholder feedback 34
Figure 7: Pillar weights 35
Figure 8: Indicators by priority 36
Figure 9: Framework 37
Figure 10: Geographical distribution of responses 41
Figure 11: Categorisation of respondents based on revenue size 42
Figure 12: Distribution of respondents across industries 42
Figure 13: State profile 44
Figure 14: Performance of states on overall Investment Friendliness Index 47
Figure 15: Performance of large states 49
Figure 16: Performance of hilly and northeastern states 51
Figure 17: Performance of Union Territories and City States 53
Figure 18: Performance of states on Investment Friendliness Index 64
Figure 19: Scoring methodology for secondary indicators 179
Figure 20: Trimmed min-max technique for number of international airports/area of state 180
19
Investment Friendliness Index
List of tables
Table 1: State categorisation 43
Table 2: Rank and score of states on Investment Friendliness Index 65
Table 3: List of indicators – Infrastructure 174
Table 4: List of indicators – Business climate 175
Table 5: List of indicators – Resources 176
Table 6: List of indicators – Government policy 177
Table 7: List of indicators – Regulatory ease 177
Table 8: List of indicators – Financial health 177
Table 9: List of indicators – Institutional environment 178
Table 10: List of indicators – Environment resilience 178
20
Contents
22
25
31
47Executive summary
Chapter 1:
Introduction
Chapter 2:
Approach and methodology
for index preparation
Chapter 3:
Results
69
Chapter 4:
State profiles
67Conclusion
174Annexures
22Investment Friendliness Index
Executive summary
22
India has clocked robust economic growth over the
past three decades, with gross domestic product
(GDP) growing an average 6.1% in real terms
over fiscals 1992 to 2025. As the country strives
to achieve the vision of Viksit Bharat by 2047,
which emphasises self-reliance, innovation and
citizen empowerment, growth needs to surpass
the historical rate amid a challenging global
landscape marked by increasing protectionism.
Achieving this ambitious goal will require a
significant increase in India’s investment rate.
According to the World Bank, for India to become
a high-income economy by 2047, the country
must achieve an average real GDP growth of 7.8%
over the next two decades. Notably, investments
have accounted for over half of the growth
seen since fiscal 1992, riding on the landmark
economic reforms of the early 1990s. A sustained
acceleration in investments will be crucial from
here. While central reforms provide the framework
for this vision, state-level initiatives will be vital
in attracting private investments by enhancing
ease of doing business, improving infrastructure
and ensuring policy predictability.
The Investment Friendliness Index has been
developed to understand how well Indian states
are positioned to attract investments. The index
covers all 28 states and eight union territories
(UTs) and evaluates what makes a state
attractive for investors, as well as the challenges
investors face. The index focuses on eight pillars:
infrastructure, business climate, resources,
government policy, regulatory ease, institutional
environment, financial health and environment
resilience.
Formulation of the index began with a
thorough review of the secondary literature
to evaluate existing frameworks that assess
a state’s investment attractiveness. Then, key
factors influencing investment decisions were
identified and organised into broad pillars, with
relevant parameters defined to capture specific
performance areas. To ensure a comprehensive
perspective from the investor’s viewpoint, an
exhaustive list of 953 indicators were compiled
across eight critical pillars. The next phase
focused on refining the list of indicators based on
their significance within the pillars, emphasising
those that directly influence decision-making and
risk assessment. Key metrics included relevance,
importance, measurability and availability. Each
indicator was assessed to gauge its capacity
for quantitative or qualitative evaluation, with
reliable and current data being essential for
accurate representation.
The framework was enhanced through top-
down and bottom-up approaches, resulting in
a streamlined set of indicators. The final pillar
weights were established based on discussions
with Advisory Committee and stakeholders. The
committee offered strategic direction by shaping
indicator selection, refining the index structure
and weightages, and recommending statistical
tests, thereby ensuring the Index’s credibility and
practical relevance. Inputs from 165 stakeholders
across various sectors were incorporated to
ensure the framework reflected ground realities
and prioritised investor concerns.
The index uses a 100-point scale and serves as a
benchmark for states to improve their investment
environment. Each state was scored on different
aspects using a mix of primary surveys and
publicly available data. Major participants in
the survey spanned across key sectors in India.
Based on the scores, states were grouped into
four categories: Top performers, frontrunners,
emerging performers and aspiring states. Five
Investment Friendliness Index
Introduction 23 23
states were identified as top performers: Gujarat,
Maharashtra, Tamil Nadu, Goa and Odisha. Fifteen
states were classified as frontrunners, including
Delhi, Uttar Pradesh and Andhra Pradesh. Eight
states/UTs fell into the emerging performers
category, while an equal number fell into the aspiring
states category.
To ensure the comparison between diverse states
is meaningful, the assessment also groups them
into three geographical categories: large states,
hilly and northeastern states, and city states and
UTs. This approach helps account for structural and
contextual differences. Among large states, Gujarat
is the best performer, followed by Maharashtra and
Tamil Nadu. Among hilly and northeastern states,
Uttarakhand, Assam and Himachal Pradesh are the
leading performers, with others showing moderate
scores in the mid-30s to mid-40s band. Among city
states and UTs, Goa, Delhi and Chandigarh stand out
on top.
Gujarat tops the list with a score of 56.6, based
on its efficient port operations and competitive
power sector that ensures reliable electricity and a
favourable business climate. Maharashtra follows
closely with a score of 53.7, excelling in attracting
significant private equity/venture capital (PE/VC)
investments, along with the highest number of Atal
Tinkering Labs (ATLs), supported by strong economic
indicators. Tamil Nadu, with a score of 53.3, ranks
high in both infrastructure and business climate,
driven by efficient port operations, a near 100%
memorandum of understanding (MoU) conversion
rate and impressive export performance.
The detailed state profiles included in the report
will provide investors and states with a better
understanding of the scores. These profiles present
a snapshot of key macro-economic indicators for the
state, highlight the state’s key industries and provide
a detailed view of a state’s performance, highlighting
what is working well, the indicators that are driving
the scores, and how each state compares with the
top performer and average score across different
pillars.
Additionally, the state profiles capture voices from the
ground, which are perspectives shared by over 1,850
investors spoken to as part of the primary research.
Feedback from investors helps identify aspects
about a state that they appreciate as well as areas
that need improvement. These profiles will enable
states to learn from one another and implement best
practices to enhance their investment attractiveness.
Ultimately, the Investment Friendliness Index aims
to encourage collaboration and informed decision-
making. By acting on the insights from this index,
states can foster a healthier business environment,
thereby attracting more capital. This can enable
stronger economic growth across states, percolate
capital and, thereby, development across regions,
strengthen investment attractiveness, and spur
meaningful steps towards realising the Viksit Bharat
vision.
24Investment Friendliness Index
Introduction
25
Chapter 1:
Introduction
1.1 Investing for the next leg of growth
India has achieved healthy economic expansion over the past three
decades, with its GDP growth averaging 6.1% in real terms between
fiscals 1992 and 2025.
The run-up has been even stronger in recent past.
In the decade before the Covid-19 pandemic, GDP growth averaged
6.6%. After the pandemic, the pace exceeded expectations, partly
because of the low base of fiscal 2021 and partly because of the
government’s emphasis on boosting infrastructure investments
through budgetary spending.
This helped India remain one of the fastest-growing large economies.
The Hon’ble Prime Minister had, in his 2025 Independence Day
speech
1
, outlined the vision of Viksit Bharat by 2047, focussing on self-
reliance, innovation and citizen empowerment. The government is now
preparing the roadmap for it to mark the 100 years of Independence.
1
Press Information Bureau of India, Prime Minister’s Office (2025). ‘PM Modi’s 79th I-Day Address:
A Vision for a Viksit Bharat 2047’.
26Investment Friendliness Index
Note: Investment growth is based on gross fixed capital formation; growth is in real terms
Source: National Statistics Office
To achieve that goal, the growth line needs to rise
well above past trajectories.
And this must happen even as the global landscape
is becoming more challenging. Major economies are
shifting towards protectionism, contrasting with
previous decades that emphasised lowering trade
barriers and enhancing globalisation.
In this context, activating domestic growth
drivers and relentlessly removing bottlenecks in
the economy, as well as easing the way of doing
business, are crucial.
Here, raising India’s investment rate becomes
paramount.
To be sure, investments have been a critical driver of
growth since the seminal reforms of the early 1990s.
The chart below shows how India’s GDP growth is
positively correlated with increasing investments in
the past 30 years.
Figure 1: India’s GDP and investment trajectory in the past 30 years
1.2 The role of investments in growth
Long-term growth is driven by capital (built through investments), labour and productivity.
Using a growth accounting framework developed by
the Nobel Prize-winning economist Robert Solow to
analyse the drivers of growth in India highlights the
importance of investments or capital.
Capital has been the primary driver of growth since
the economic reforms of 1991. It accounts for a
little over half of the growth seen since fiscal 1992,
according to the KLEMS (acronym for capital, labour,
energy, materials and services) database published
by the Reserve Bank of India (RBI).
The next biggest contributor to growth has been
gains in productivity from improved connectivity,
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
-10.0 -5.0 0.0 5.0 10.0 15.0 20.0 25.0
GDP growth (%)
Investment growth (%)
Introduction 27
the digitisation and digitalisation reforms, and
improvement in processes.
A World Bank 2025 report
2
estimates capital
deepening and high productivity growth contributed
the most to overall GDP growth in India between
calendar years 2000 and 2019.
Capital has been the key driver of post-pandemic
growth as well. The central government’s
infrastructure push via budgetary capital
expenditure (capex) has led to strong gross fixed
capital formation (GFCF) growth. The central
government increased its capex to 2.9% of GDP on
average between fiscals 2022 and 2025, compared
with 1.7% pre-pandemic (average for fiscals 2016-
2020)
Investments are crucial to India’s growth. The World
Bank estimates that India needs to grow 7.8% on
average in real terms over the next two decades
to become a high-income economy by 2047—the
central goal of Viksit Bharat. For this, the share of
investments in GDP should rise by next decade.
According to the World Bank, countries which
transitioned to a high-income status followed
similar trajectories where investment and growth
surges coincided, but the share of investments in
GDP declined once the country crossed a certain
high threshold level of per capita GDP. Therefore,
for India’s growth to accelerate, a sustained
acceleration in investments will be crucial in its
current stage of growth.
1.3 How investments deliver multiplier
effects
Investments stimulate growth by enhancing the
productive capacity of the economy. Investments
could be in physical assets (machinery, production
lines, roads and other infrastructure), in
technological processes (driving innovation and
better use of capital) or in human capital (building
a skilled and educated workforce). Alongside a
robust institutional framework, political stability
and supportive policies bring resilience and
sustainability to economic growth.
The Economic Survey 2022-23 estimated that
economic output can increase by at least four times
the amount of capex incurred
3
.
The significance of investments in sustaining high
growth is evident from the experiences of successful
East Asian economies (refer to Box 1).
The government has been taking a similar approach
to these economies, actively investing in rural roads,
highways, airports and railways to improve physical
connectivity, reduce logistics costs and enhance
competitiveness. This kind of investment was
crucial in fostering growth in East Asian economies.
2
World Bank. 2025. India Country Economic Memorandum: Becoming a High-income Economy in a Generation. © World Bank.
3
This is based on capex multiplier estimates by (1) NIPFP (2014). Fiscal Multipliers of India and RBI (2013). Size of Government Expenditure Multipliers in India: A
Structural VAR Analysis. RBI Working Paper series
Box 1: Pivotal role of investments in East Asian success
Japan’s sustained growth after World War II was driven by a significant rise in investments, with
the investment rate increasing from 26.7% in 1950-55 to 42.6% by 1973
4
. These investments,
particularly in infrastructure, reduced logistics costs and supported manufacturing activity, leading to annual GDP growth exceeding 10% during 1955-60. This investment surge fostered a cycle of capital deepening, increased worker productivity and attracted foreign technology, establishing Japan as a global manufacturing leader by the 1970s.
28Investment Friendliness Index
1.4 Improving investment environment
India’s investments picked up pace after the pandemic,
growing faster than GDP since fiscal 2022. Investments
stood at 29.9% of GDP in fiscal 2025, a tad higher than
the decadal average of 29.1%.
The government and households have been the primary
drivers of investment growth in the post-pandemic
period. Investments by government and public sector
enterprises together grew 13.9% (in real terms) between
fiscals 2022 and 2024 (as per latest data available),
followed by household capex (through real estate)
at 13.4%. Private capex growth was slower at 8.7%.
Although uneven, private investment growth has
improved, albeit at a slower rate compared with
government and household investments. With strong
balance sheets, corporations are well-positioned to take
over the investment momentum from the government,
aided by the Production Linked Incentive (PLI) scheme.
Furthermore, the government is making steady progress
in enhancing the investment environment through
deregulation and the recent implementation of long-
awaited labour reforms, which consolidate 29 labour
laws into four codes.
As private corporate investments play a larger role and
the government aims to persist with infrastructure
development, though in a more selective manner,
capital will continue to be a crucial factor in India’s
growth trajectory.
At this stage, equal participation from states is needed
to improve the investment environment.
1.5 State-level initiatives: The key to
unlocking private investments
While central reforms set the direction for the Viksit
Bharat vision, private investors ultimately decide
where to put their money based on state-level ease
of doing business, infrastructure quality and policy
predictability. States are not just implementers, they
are active competitors for private capital, and evidence
shows that proactive states capture a disproportionately
large share of investments.
South Korea transitioned from a low-income, agrarian economy in the 1960s to an industrial
powerhouse by 1990, with the investment-to-GDP ratio rising from 10.5% in 1960 to 41.2% by
1991. State-directed investments focused on sectors such as electronics and shipbuilding,
boosting export capacity and employment. Infrastructure investments enhanced transport
efficiency, supporting regional growth and elevating South Korea to high-income status within
three decades.
China’s growth since its economic reforms in 1978 was primarily investment-driven. The
investment share in GDP rose from 34.5% in 1980 to 43.5% by 1993, resulting in China achieving
double-digit GDP growth by early 1990s. The investment rate sustained above 40% in the early
2000s, helping China become a global manufacturing powerhouse. Investments were also the
key driver of China’s economic recovery after the 2008 financial crisis, with the investment rate
peaking at 46.3% in 2011, driven by an infrastructure boom. This helped China achieve double-
digit GDP growth (until 2010), transforming it into the world’s second-largest economy.
4
Investment rate and GDP growth data is sourced from the World Bank database. For Japan, data before 1970 is not available on the World Bank database. Older
data for Japan’s investment ratio and GDP growth is sourced from research paper: Komiya, R (1966). Japan: “Foreign Tax Policies and Economic Growth”. National
Bureau of Economic Research and The Brookings Institution
Introduction 29
States drive the investment race
The top five states—Maharashtra, Karnataka, Gujarat,
Delhi and Tamil Nadu—attract ~85% of total foreign
direct investment (FDI) inflows. In contrast, states in the
northeast receive less than 1% combined, highlighting
the widening regional divergence.
Why reforms at the state level matter for private
capital investment flow
The incentives and policies of a state are critical in shaping
the investment decisions of companies. These are:
Land and labour: Private investors repeatedly
cite land availability, labour law flexibility and power reliability—all under state
control—as the top three factors dictating
their investment decision
Speed of clearances: States that have
implemented single-window systems have
cut approval times to under 30–60 days
from 6–18 months, making those preferred
investment destinations
Incentive competition: Leading states offering
customised packages (capital subsidies, power tariffs, state goods and services tax reimbursement) can swing where a Rs 10,000-crore project is set up. Gujarat’s semiconductor policy and Tamil Nadu’s electric vehicle policy are prime examples that directly influenced investments by Samsung, Tata Group and Foxconn
Infrastructure readiness: Private players
follow where roads, ports, power and industrial
corridors already exist, or are under fast-
track development (e.g., Gujarat’s GIFT City,
Maharashtra’s Samruddhi Corridor and
Karnataka’s Chennai-Bengaluru Industrial
Corridor)
It has been observed that states that lag in governance
reforms or infrastructure readiness generally struggle
for capital flows.
In this milieu, the Hon’ble Prime Minister has called
for the preparation of an Investment Friendliness
Index, recognising that companies and investors are
interested in India, and that states should be encouraged
to seize this opportunity and position themselves as
competitive investment destinations.
The index is expected to bring about greater
accountability and performance benchmarking among
the states. It will highlight best practices that can be
replicated across other states and encourage reforms
that collectively enhance the country’s investment
attractiveness.
In doing so, the index will foster healthy competition
among the states, motivating the states to improve,
while also learning from each other’s successes.
The index will go beyond merely ranking the states.
It will enable states to track, monitor, and evaluate
performance across multiple aspects that are important
for investors, such as infrastructure, regulatory ease,
business climate, financial health to name a few.
By assessing these parameters, the index aims to
ensure that the reforms at the state level are not
limited to policy announcements but also reflect in
on-the-ground implementation. The index will also
function as a repository of insights. Policymakers will
gain access to reliable data on areas where states
excel and those that require attention.
30Investment Friendliness Index
31
Chapter 2:
Approach and
methodology for
index preparation
2.1 Roadmap
Figure 2 provides the process followed to develop the Investment Friendliness Index.
Figure 2: Roadmap
10 Index scoring and formulation
9 Deployment of
investor perception
survey
5 Feedback from the
stakeholder discussions
6 Pillar and indicator
weightages finalised
4 Shortlisted 90
indicators out of 193
3 193 indicators
shortlisted initially
2 953
indicators
identified
8 Revised framework with 84
indicators designed
7 Advisory
committee discussion
1 Literature review and
designing of broad framework
32Investment Friendliness Index
2.2 Framework development
The first step involved reviewing secondary literature
to evaluate existing frameworks assessing a
state’s investment attractiveness. This included a
comprehensive literature review of benchmarking
frameworks such as Michel Henry Bouchet’s Country
Risk Assessment, the World Bank’s Ease of Doing
Business framework and the National Council of Applied
Economic Research’s State Investment Potential Index.
This was followed by assessing key factors that
influence investment decisions, which were
subsequently organised into broad pillars. Within each
pillar, relevant parameters were defined to capture
specific areas of performance. These parameters were
further represented through measurable indicators.
An exhaustive list of 953 indicators was prepared,
encompassing all critical aspects from an investor’s
perspective, across eight pillars.
2.3 Indicator refinement, assigning weights
and stakeholder consultations
The list of indicators was whittled down by evaluating
their significance in the pillars, i.e. those that could
directly influence decision-making, risk assessment,
or the overall attractiveness of a state for investors.
While streamlining the indicators for the Investment
Friendliness Index, four key metrics were considered:
Relevance, importance, measurability and availability.
An indicator’s relevance was determined by its
relationship in attracting investments to the state,
whereas its importance was measured by the extent to
which it influenced overall investment decisions. Each
indicator also had to be measurable, allowing for either
quantitative or qualitative assessment. Additionally,
the availability of reliable and up-to-date data on a
recurring basis through primary or secondary research
was essential to ensure that the indicator provided
an accurate and timely representation of the state’s
investment environment.
Figure 3: Eight pillars comprising the Investment Friendliness Index
Infrastructure Business climate Resources
Regulatory ease
Government policy
Financial healthInstitutional environmentEnvironment resilience
Approach and methodology for index preparation 33
Parallelly, the framework and indicators were re-evaluated
via top-down as well as bottom-up approaches.
In the top-down approach, the most critical indicators
under each pillar were assessed to ensure that the
framework was comprehensive and effective. In the
bottom-up approach, the list of indicators was refined,
based on stakeholder feedback, and those that captured
similar outputs were merged.
This exercise streamlined the framework and reduced
redundancy.
Figure 4: Process followed for indicator selection/rejection
Take the case of state gross fiscal deficit indicator. It meets the criteria as follows:
Verify the accurate
categorisation of
indicators within their
respective pillars
Indicator consolidation: Merge similar
indicators to eliminate redundancy,
reduce complexity and define indicators
sharply to ensure measurability
Rank the indicators in
descending order of scoring
based on their Importance and
Relevance, focusing on the
most critical indicators
Verify the regular availability of
the indicators to ensure that the
necessary data is consistently
accessible, reliable and up-to-date
Compile the final list of indicators,
which are accurately categorised,
consolidated, prioritised, and
supported by reliable data
Relevance
Yes. It reflects the
state’s financial
health and its
ability to invest in
infrastructure or
offer incentives to
businesses
Importance
Yes. A high fiscal
deficit may indicate
potential financial
instability, which
could affect a state’s
ability to attract long-
term investments
Measurability
Is quantifiable
Availability
The data is published
annually in the
secondary domain,
such as the Reserve
Bank of India’s
(RBI) Handbook of
Statistics
34Investment Friendliness Index
2.4 Stakeholder consultations
The stakeholder consultations helped
ensure that the framework accurately
reflected ground realities, prioritised
investor concerns and identified the
most crucial indicators for assessing
a state’s investment attractiveness,
thereby minimising potential oversights.
During these sessions, 165 stakeholders
across industry associations, regulatory
bodies, central ministries, consultancy
firms, sovereign wealth funds,
multilateral institutions, investment
banks and private equity firms were
consulted.
Based on feedback, 84 indicators were
chosen. Through these interactions,
valuable insights were also gathered
across the investment ecosystem,
ensuring that the framework was built
on a broad spectrum of perspectives
and expertise. Additionally, based on
research, indicative weightages were
assigned to the pillars and indicators,
which were then vetted through these
consultations.
2.5 Stakeholder feedback evaluation
The stakeholder feedback evaluation process involved
classifying the feedback into five distinct categories:
overarching recommendations, framework-specific
recommendations, indicator-specific recommendations,
perception-based recommendations, and miscellaneous.
This categorisation enabled us to systematically analyse
and address a diverse range of suggestions provided
by stakeholders.
Figure 5: Stakeholders
Figure 6: Stakeholder feedback
Stakeholders
State
Governments
Multilateral
Institutions
Industry
Associations
Consulting
Firms
Central
Ministries
Regulatory
Bodies
Investment
Banks & PE/VC
Firms
Sovereign
Wealth Funds
Miscellaneous
Overarching recommendations
Framework-specific recommendations
Indicator-specific recommendations
Perception-based recommendations
Approach and methodology for index preparation 35
This approach ensured a balanced assessment, where
quantitative data provided objective measurement and
qualitative feedback captured on-ground perspectives
that numbers alone may miss. Each recommendation
was carefully evaluated and prioritised as high, medium
or low.
The revised framework was developed based on the
feedback and suggestions received from stakeholders.
The iterative process ensured that the final framework
was robust, relevant and effective in achieving its
intended objectives.
The framework was ultimately finalised around eight
pillars and 84 indicators, comprising 62 secondary
and 22 perception-based indicators.
Tentative weights were assigned to the pillars through
a consultative and evidence-based approach to ensure
robustness and stakeholder alignment.
This helped identify the relative importance of various
dimensions that influence a state’s overall investment
attractiveness and industrial competitiveness, such
as infrastructure, business climate and resources.
Following the review, an initial set of pillar weights was
discussed with the Advisory Committee to align the
framework with the study’s objectives and strategic
priorities. These proposed weights were subsequently
validated through stakeholder consultations, and
the final pillar weights were determined based on
stakeholder feedback.
Figure 7: Pillar weights
Infrastructure
Regulatory
ease
Business climate
Financial health
Resources
Institutional
environment
Government
policy
Environment
resilience
25%
8 3 6
24 18 17 4
4
12%
20%
7%
15%
6%
10%
5%
#
indicators
36Investment Friendliness Index
Following finalisation of the pillar weights, indicator
weights were assigned.
The weight assigned to each pillar was first divided
equally among the indicators under the same pillar
to establish a base weight. Under this, the indicators
were classified into three priority tiers—high,
medium and low—based on the relative influence of
the pillar’s overall performance and their relevance.
• High-priority indicators were assigned a weight higher than the base weight
• Medium-priority indicators retained the base weight
• Low-priority indicators were assigned a weight lower than the base weight
This tier-based differentiation allowed the index to better capture the nuanced importance of specific indicators within each pillar. The proposed indicator
weights were then reviewed and validated by Advisory
Committee to ensure methodology robustness and alignment with stakeholder expectations.
The draft framework was finalised after deliberations
between NITI Aayog and Crisil.
Notably, this multi-stage, consultative process ensured
that the final weighting structure was both data-driven
and policy-aligned, enhancing the credibility and representativeness of the index outcomes.
2.6 Perception/primary surveys
The index comprises 22 indicators that capture on-
ground realities across key pillars used to assess states.
The survey was conducted with 1,850 investors across
36 states and union territories. Some investors had experience operating in multiple states, resulting in a total of 2,503 responses.
While secondary data provided a reliable quantitative
foundation, certain aspects critical to assessing
investment attractiveness were either unavailable or did
not fully capture on-ground realities. The perception/
primary survey, therefore, helped bridge this gap by
incorporating insights directly from stakeholders and
investors familiar with state-level business environment.
Perception often influences where businesses choose
to establish or expand operations. Hard data helps
validate existing perceptions for each parameter within
the framework, particularly those requiring investor
verification or ground-level assessment, ensuring that
the final index reflects not only statistical performance
but also the perceived ease, reliability and overall investment climate of each state.
Multiple questions contributed to the formation of a
single indicator, with the average score represented on
a 10-point scale. This average was then scaled up to a
100-point scale for consistency across all indicators.
2.7 Framework
Figure 9 illustrates the framework that was arrived at
post stakeholder consultations and literature surveys,
with weightages assigned to each pillar.
Figure 8: Indicators by priority
Indicators Priority
Gross state domestic product (GSDP) per capita H
Capital expenditure/GSDP M
Presence of Atal Tinkering Labs in the state per capita L
Approach and methodology for index preparation 37
Each pillar has been explained, highlighting the
parameters it covers and some representative
indicators it comprises. The entire list of pillar-wise
indicators is provided in Annexures.
1. Infrastructure
This pillar evaluates hard as well as soft
infrastructure essential for business operations
and the seamless functioning of industries.
In terms of hard infrastructure, the focus is on
storage and logistics, covering four key modes of
transport: road, rail, air and ports.
For air transport, airport capacity, cargo handling
relative to manufacturing output and the number of
airports in the state with international operations
are considered, as these factors indicate a state’s
capability to facilitate trade and global integration.
Figure 9: Framework
Pillars Parameters
Infrastructure
Resources
Business climate
Government
policy
Regulatory ease
Financial health
Environment
resilience
Institutional
environment
25%
20%
15%
10%
12%
7%
6%
5%
Logistics | Energy | Digital infrastructure | Industrial infrastructure
Economic performance
| Innovation ecosystem | Business facilitation
Natural resources
| Human resources
Incentives
| Approvals
Compliance
| Legal
Fiscal position
Governance and rule of law
Geophysical
| Weather-related
Shortlisted indicators: 84
Perception-based indicators: 22; secondary indicators: 62
38Investment Friendliness Index
For road infrastructure, road density, connectivity
and quality are assessed. Rail density is examined to
evaluate the effectiveness of rail transport, whereas
in ports, port capacity, along with turnaround times,
is analysed to measure efficiency.
In soft infrastructure, indicators related to digital
readiness, high-speed internet access and 5G
penetration are included. These elements are
crucial for supporting technology-driven industries
and modern service sectors. The framework also
incorporates investor perceptions of logistics
infrastructure.
2. Business climate
This pillar evaluates a state’s conduciveness
for starting, sustaining and scaling businesses,
focusing on three key components: Economic
performance, innovation and business facilitation.
Economic performance reflects the overall health
of a state’s economy. Key indicators include gross
state domestic product (GSDP) per capita, ratio of
exports-to-GSDP and foreign direct investment
(FDI) inflows. These indicators provide insight into
the state’s economic standing and its integration
with global markets, highlighting its potential to
attract investment.
Innovation is a critical component that showcases
the state’s capacity to foster new ideas and
entrepreneurial ventures, enabling businesses
to grow. Important indicators in this area are the
presence of incubators, and the number of startups
and patent applications. These metrics illustrate
the vibrancy of the entrepreneurial ecosystem and
the state’s readiness to support innovation.
Business facilitation encompasses systems and
infrastructure that support investors. This includes
credit availability to industries and the number
of bank branches, which together measures
accessibility of capital for business expansion.
Additionally, the efficiency of investor facilitation
centres, assessed through investor satisfaction,
reflects how easily investors can navigate the
regulatory and administrative landscape.
3. Resources
This pillar focuses on natural and human resources,
the two fundamental inputs that drive business and
industry. States with abundant natural resources
such as minerals, water and land have a competitive
edge in sectors such as steel, cement, power and
manufacturing.
Indicators such as the state’s share in national
production of metallic, non-metallic minerals, coal
and annual extractable groundwater availability
highlight the strength of this resource base.
Renewable resource potential, including solar,
wind, hydro and bioenergy, are also considered,
recognising the growing importance of sustainable
energy in attracting long-term investment.
Under human resources, indicators such as
the percentage of students enrolled in science,
technology, engineering and mathematics (STEM)
education, and annual addition of new technical
workforce and women workforce participation are
assessed to measure the depth and inclusiveness
of the labour pool.
The quality of higher education and employability is
measured through indicators such as the proportion
of colleges ranked among the top 100 nationally,
state expenditure on education and employer
satisfaction with the job readiness of graduates.
These factors demonstrate a state’s commitment
to developing a workforce capable of supporting
advanced industries and services.
Beyond economic considerations, quality-of-life
factors such as availability of schools, healthcare
and social infrastructure also influence investment
attractiveness. States that combine a strong natural
resource base with a skilled, healthy and productive
workforce create an ecosystem in which industries
can thrive. This balance ensures that the states
remain competitive in both resource-intensive and
knowledge-driven sectors.
4. Government policy
This pillar evaluates the incentives offered by
states and also the investor perception about
their on-ground implementation, as these factors
significantly impact decisions on where to invest.
Certain incentives, like those on capital expenditure
and research and development, can reduce the
cost of doing business and enhance companies’
competitiveness.
The proportion of total industrial capex a state sets
aside for disbursal as capex incentives annually
is a key metric that reflects the importance the
state accords for industrial growth. Similarly, the
ratio of overall incentive allocations to a state’s
Approach and methodology for index preparation 39
budget is an indication of its fiscal commitment
towards investment facilitation. The R&D incentives
disbursed, measured against a state’s gross value
added, is a measure of its support for innovation
and technology-driven industries. These ratios
enable a standardised comparison between states,
accounting for differences in size and industrial
base.
Beyond the numbers, stakeholder satisfaction
scores provide insights into the effectiveness of state
incentive schemes. Factors such as the design of
policies, efficiency and transparency in the approval
process and speed of incentive disbursement have
a direct influence on investor perceptions. High
satisfaction scores indicate that the incentive
system not only exists but is accessible, reliable
and responsive, reinforcing business confidence in
the state’s ability to support growth and operational
stability. States excelling in these domains tend to
foster an environment conducive to attracting new
businesses and retaining existing ones.
5. Regulatory ease
This pillar examines the impact of state-level
regulatory environment on investments by looking at
compliance requirements and investors’ on-ground
perception of the regulatory landscape. It evaluates
the burden, transparency and predictability
of regulations, which are the factors potential
investors often consider while deciding on new
locations. States that maintain streamlined and
stable regulatory frameworks, reduce operational
uncertainty and lower time and cost barriers for
new and existing businesses are widely viewed as
attractive investment destinations.
A range of indicators has been used to assess
regulatory ease. They include the number of
licences required, time taken to start a business
and the efficiency of approval processes for critical
utilities such as electricity and water. Timeliness
and reliability of land allotment procedures for
industrial purposes and costs and clearances for
environmental compliance are also vital metrics.
These data points quantify not only the direct
regulatory burden but also the efficiency of
government systems in facilitating business entry
and expansion. States that score favourably tend to
have higher investor satisfaction.
Qualitative aspects such as stakeholder
perceptions are equally important in the analysis
of investment attractiveness. Indicators such
as investor satisfaction with the single-window
system, perceived ease of environmental clearance
and the speed of approvals offer insights into how
regulations translate into day-to-day business
experiences. The presence of efficient commercial
courts and the average time required for exit
processes (such as closing operations) further
reinforce confidence in the state’s legal and
regulatory architecture. Investors regard easy exit
mechanisms and strong contract enforcement
as critical, especially when market or business
conditions necessitate a change or termination of
operations.
6. Financial health
The financial health of a state is a critical factor
in investment decisions as it directly impacts the
security and stability of investments. States with
sound fiscal management foster greater investor
confidence as they are better equipped to meet
financial obligations and provide a stable business
environment.
This pillar assesses the debt profile and fiscal
balance of a state through indicators such as
total outstanding liabilities as a percentage of
GSDP, interest payments as a share of GSDP and
gross fiscal deficit level. Elevated liabilities and
interest outflows indicate fiscal stress, which has
the potential to hinder a state’s ability to deliver
promised incentives. Additionally, persistent fiscal
deficits can signal a heavy reliance on borrowing,
potentially undermining the long-term capacity to
fund public services and infrastructure.
Analysing these metrics enables investors to
differentiate between fiscally prudent and risk-
prone states, helping them make informed
investment decisions. States with sound financial
health can offer better incentives, reduce the
cost of capital and serve as safer, more reliable
destinations for large-scale investments. The
financial health pillar ensures that state-level fiscal
health is transparently embedded within broader
assessments of investment potential.
7. Institutional environment
This pillar measures the efficiency, reliability and
transparency of a state’s governance system, as it
directly impacts policy stability, business operations
40Investment Friendliness Index
and dispute resolution. Strong institutions build
investor confidence through consistent application
of laws, swift grievance redressal and effective
commercial dispute management, thereby enabling
businesses to operate with minimal interference
and risk.
The assessment criteria for this pillar encompasses
the severity and frequency of labour disruptions,
including strikes and crimes, especially economic
offences, such as forgery and fraud. Additionally,
perception-based indicators include interference
by officials, satisfaction with transparency and
governance, and accessibility and efficiency of
grievance redressal systems. The assessment also
tracks the number of cybercrimes, reflecting the
growing importance of digital infrastructure.
States that perform well on these indicators have
a high degree of predictability, policy continuity
and procedural justice, which are essential for
attracting and retaining investments. This pillar
ensures that state rankings capture not only
the economic potential but also the capacity to
sustain it through stable, transparent and investor-
friendly governance— the attribute that creates a
favourable business environment that encourages
long-term investments and collaborations, thereby
contributing to a state’s economic growth and
development.
Moreover, a robust institutional framework
can facilitate the implementation of policies
and programmes that promote innovation,
entrepreneurship and job creation, which are
essential for a state’s overall competitiveness. By
prioritising institutional environment, states can
position themselves as reliable and attractive hubs
for investors, businesses and talent.
8. Environment resilience
This pillar examines the environmental and disaster-
related vulnerabilities of a state, as they directly
impact business continuity and asset security.
Natural calamities, such as earthquakes, cyclones,
floods and pollution, are increasingly influencing
investor decisions, as exposure to these events can
lead to operational interruptions, cost escalation
and reduced value of fixed assets.
Indicators under the pillar include the proportion
of high-risk earthquake zones in a state’s total
area, its air quality index (AQI) and comprehensive
metrics on the frequency and severity of cyclones,
flooding and landslides. Investing in states with
poor AQI or frequent extreme weather events
exposes businesses to higher insurance costs and
losses from infrastructure damage or health-related
disruptions. Notably, stakeholder perceptions
of disaster preparedness are also factored in,
revealing the effectiveness of state policies and
response systems.
States with effective disaster risk management and
robust environmental regulations are positioned as
resilient destinations, attracting investors seeking
to minimise operational disruptions and long-term
risks. The environment resilience pillar provides
essential clarity on the resilience and adaptability
of a state’s investment climate, helping investors
devise risk-adjusted investment strategies.
By considering these factors, investors can make
informed decisions that balance potential returns
with environmental and disaster-related risks. A
state’s ability to mitigate and respond to natural
disasters can influence its reputation and appeal
to investors, talent and tourists. Thus, a strong
performance of this pillar can be a key differentiator
for states seeking to attract investment and drive
sustainable economic growth.
2.8 Data homogenisation and scoring
Establishing a uniform framework to score
states is crucial for consistent monitoring and
assessment of their performance across key
indicators of investment readiness. A standardised
scoring mechanism enables comparability and
helps identify areas that require targeted policy
intervention. However, given the diverse nature of
the data, which spans quantitative metrics and
qualitative perceptions, data homogenisation
is crucial for ensuring fairness and accuracy in
evaluation. This process establishes a reliable
foundation for ranking and benchmarking states,
thereby promoting healthy competition and
encouraging continuous improvement.
To score indicators on a common scale of 0-100, a
scoring methodology was developed for states. The
shortlisted indicators were categorised into two
groups and scored accordingly:
1. Secondary indicators: Directly measurable and
quantitative
Approach and methodology for index preparation 41
2. Perception-based indicators: Qualitative and
subjective
Secondary indicators
For secondary indicators, the min-max normalisation
was adopted for scoring as shown below:
(S - Min)
Normalised score =
(Max - Min)
Where S= state score
Using this formula, each state’s score (S) was
translated into a range between 0 and 100. A
score equal to the minimum will become 0 and
a score equal to the maximum will become 100,
with scores in between scaled accordingly. For
certain states exhibiting outlier data points, a
trimmed min-max standardisation method was
employed. This approach is further elaborated in
the Annexure 2 section. For Union Territories such
as Ladakh, Lakshadweep and Puducherry, the
average of available scores across indicators is
taken to compensate for the lack of data on certain
indicators.
Unlike quantitative data, no minimum-maximum
or trimmed minimum-maximum normalisation was
applied to the perception-based indicators, as the
scoring inherently reflected relative respondent
sentiment within the defined scale.
Survey framework and statistics
• Indicator coverage: 22 perception-based
indicators, each comprising one or more
questions, resulting in a total of 41 questions
across indicators
• Respondent base: 1,850 unique respondents across 36 states and union territories, amounting to 2,503 responses
• Stratified respondent sampling: Respondents are categorised into large and MSME segments as well as sectors to provide a nuanced understanding of state performance
• Multi-state perspectives: As some respondents possess knowledge of multiple states, the number of responses exceeds the number of unique respondents, reflecting the broader geographic insights captured in the survey
Figure 10: Geographical distribution of responses
6
131
5
4548
17
39
7
120
75
201
126
41
3433
199
104
21
116
341
58
37
38
1
55
102
2
178
108
14
156
51
84
A & N Islands
Andhra Pradesh
Arunachal Pradesh
Assam
Bihar
Chandigarh
Chhattisgarh
DNH & DD
Delhi
Goa
Gujarat
Haryana
Himachal Pradesh
Jammu & Kashmir
Jharkhand
Karnataka
Kerala
Ladakh
Lakshadweep
Madhya Pradesh
Maharashtra
Manipur
Meghalaya
Mizoram
Nagaland
Odisha
Puducherry
Punjab
Rajasthan
Sikkim
Tamil Nadu
Telangana
Tripura
Uttar Pradesh
Uttarakhand
West Bengal
42Investment Friendliness Index
Figure 11: Categorisation of respondents based on revenue size
Figure 12: Distribution of respondents across industries
Textiles, apparel, and leather
Trade and Commerce
Others Chemicals
Automotive
Energy and
Utilities
Food Processing
Hotels and
Tourism
Agriculture and
Allied
Construction and
Real Estate Transportation
Minerals
Electronics
IT and ITES Financial services Pharmaceuticals
10%
10%
10%
9%
6%
6%
5%
4%
3%
2%
4%
5%
6%6%
7% 7%
MSMEs
88%
Large corporates
12%
Approach and methodology for index preparation 43
Group No. of statesList of states
Large states 17
Andhra Pradesh, Bihar, Chhattisgarh, Gujarat, Haryana,
Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra,
Odisha, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh
and West Bengal
Union territories
and city states
7
Andaman and Nicobar Islands, Chandigarh,
Dadra & Nagar Haveli and Daman & Diu, Delhi, Goa,
Lakshadweep and Puducherry
Hilly and
northeastern
states
12
Arunachal Pradesh, Assam, Himachal Pradesh,
Jammu and Kashmir, Ladakh, Manipur, Meghalaya, Mizoram,
Nagaland, Sikkim, Tripura and Uttarakhand
The overall ranking is a comprehensive
benchmarking of states, highlighting their relative
attractiveness for investments and potential for
economic growth. It will enable states to assess
their strengths and weaknesses, pinpoint areas for
improvement and develop targeted strategies to
enhance their investment climate.
2.9 State categorisation
Given their vast diversity, comparing states and
union territories on a uniform scale can overlook
inherent structural and contextual differences.
To ensure a more balanced and meaningful
assessment, states were categorised into three
groups: hilly and northeastern states, large states
and city states/union territories.
This classification enables each state to be
evaluated against peers that enjoy similar
geographic, demographic and administrative
characteristics. For instance, hilly and northeastern
states often face terrain-related challenges, which
can impact infrastructure development and access
to resources. Meanwhile, larger states typically
operate with complex governance systems and
diverse regional dynamics. City states and union
territories, on the other hand, have compact
geographies and distinct administrative setups.
The framework adopted for this assessment
accounts for these structural differences and
ensures fairer and more accurate comparisons,
revealing the true picture of a state’s performance
relative to peers with similar contextual realities.
To facilitate a more accurate assessment of relative
performance, considering the inherent geographical
advantages and disadvantages, the states have
been grouped into the following categories:
Table 1: State categorisation
44Investment Friendliness Index
State profile report
A comprehensive state profile, as illustrated in Figure 13, has been developed for each state,
providing a detailed snapshot of the state’s performance across various pillars and key
performance indicators. The profile highlights a state’s strengths, showcasing the pillars
and indicators that have contributed to its success. It also identifies areas where the state
can improve, providing a clear roadmap for growth and development.
Note: For illustrative purposes only
Figure 13: State profile
State/UT
Area: - sq km
GSDP per capita: Rs -
Agriculture share of GVA (FY23): -%
Industry share of GVA (FY23): -%
Services share of GVA (FY23): -%
FDI inflow (FY24): Not available
*
Key industries: -
Key enable rs• Institutional environment
• Infrastructure
Data score (65) Survey score (35)
Areas needing improvement
• Government policy
Key performance indicators
• GSDP per capita
Indicators for improvement
• Share of renewables in power
generation capacity
Overall
Rank
Score
Category
rank-
-
C/L/N
State category
L – Large state
C – City state
N – Northeastern/hilly state
1 7. 7 12.6
Approach and methodology for index preparation 45
Basic state information
Each profile begins with fundamental details
about the state, including its category, i.e.
whether it is a large state, or a city state, or
a northeastern state, geographical area in
sq km and GSDP per capita. The profile also
outlines the sectoral composition of GVA across
agriculture, industry and services, along with
data on FDI inflow and key industries driving the
state’s economy.
Overall performance
This section presents a state’s overall score
and rank as derived from the composite index,
providing a snapshot of its relative position
among peer states.
Key enablers and areas requiring improvement
Under this section, a state’s performance is
examined across various pillars to identify key
enablers, the parameters with strong outcomes
and areas needing improvement, highlighting
aspects that require further policy focus or
developmental attention.
Key factors driving the state’s score
This narrative section elaborates on the
parameters and contextual factors behind a
state’s performance across broad pillars, such
as infrastructure, resources, business climate,
etc. It provides insights into the underlying
drivers and enabling conditions behind the
observed results.
Voices from the ground
*
Based on primary survey feedback, this
section captures the qualitative perspectives
of stakeholders, including positive feedback,
success stories, lived experiences and areas of
focus in a state. These perceptions complement
the quantitative findings and help present a
more holistic picture of a state’s performance.
Together, these sections provide a well-rounded
picture of the performance of each state by
combining numbers with real-world insights.
Hence, the state profile section brings together
data, context and feedback to show both
strengths and areas for improvement for each
state, helping readers understand how and why
states perform the way they do.
*
Voices from the ground available for 33/36 states
Infrastructure
Business climate
Resources
Government
policy
Regulatory ease
Institutional
environment
Financial health
Environment
resilience
60%42%
47%33%
40%
29%
57%
56%
54%
71%
76%62%
58%
66% 86%
100%
Best statePillar average
31%
7%
37%
58%
28%
39%
31%
27%
Note: For illustrative purposes only
46Investment Friendliness Index
47
Chapter 3:
Results
3.1 Overall performance of the states
The composite score of every state/Union Territory was computed by
aggregating their performance across each of the indicators coalescing into
pillars. The scores are computed out of 100.
Figure 14: Performance of states on Investment Friendliness Index
Top performers Frontrunners Emerging
performers
Aspiring states
48Investment Friendliness Index
Based on the scoring methodology, states are categorised into four groups:
Category States/Union Territories
Top performers Goa, Gujarat, Maharashtra, Odisha, Tamil Nadu
Frontrunners
Andhra Pradesh, Assam, Chandigarh, Chhattisgarh, Delhi, Haryana,
Himachal Pradesh, Karnataka, Kerala, Madhya Pradesh, Rajasthan, Telangana,
Tripura, Uttarakhand, Uttar Pradesh
Emerging
performers
Bihar, Jammu and Kashmir, Jharkhand, Meghalaya, Nagaland, Puducherry,
Punjab, West Bengal
Aspiring states
Andaman and Nicobar Islands, Arunachal Pradesh, Dadra & Nagar Haveli and
Daman & Diu, Ladakh, Lakshadweep, Manipur, Mizoram, Sikkim
Geographical categorisation of states
Given the diversity among Indian states and Union
Territories, comparing these on a uniform scale can
overlook the inherent structural and contextual
differences. To make the assessment more balanced
and meaningful, states were divided into three
categories: large states (L), hilly and northeastern
states (H), and City States/ Union Territories (C).
This classification allows each state to be evaluated
against others that broadly share similar geographic,
demographic and administrative characteristics.
Hilly and northeastern states, for instance,
often face terrain-related challenges, affecting
infrastructure and resource access, whereas larger
states operate with complex governance systems
and varied regional dynamics. City States and
Union Territories, on the other hand, have compact
geographies and unique administrative setups.
By accounting for these structural differences,
the framework ensures fairer and more accurate
comparison, highlighting a state’s performance
relative to peers with similar contextual realities.
In total, five states are top performers and 15 are frontrunners. Eight states/Union Territories each are
categorised as emerging performers and aspiring states.
Top performers
States with scores greater than 50
Frontrunners
States with scores from 45 to 50
Emerging performers
States with scores equal to or greater than 40 but less than 45
Aspiring states
States with scores
less than 40
Results 49
Gujarat
Gujarat leads the ranking, with an
overall score of 56.6. The state’s score is
driven by its strong performance across
infrastructure, business climate, financial
health, regulatory ease and government
policy pillars, with areas of improvement
in the resources, institutional environment
and environment resilience pillars.
Gujarat’s high rank in infrastructure is on
account of its efficient port operations
(lowest turnaround time weighted by
capacity for major and non-major ports)
Performance across geographical categories
Figure 15: Performance of large states
Note: Scores are out of 100
Scores have been rounded to one decimal place, though calculations were carried out to three decimal places
Top three performers: Large states
Gujarat 56.6
53.3
53.7Maharashtra
Tamil Nadu
52.4Odisha
48.9Madhya Pradesh
48.7Andhra Pradesh
48.7Karnataka
48.1Rajasthan
47.5Chhattisgarh
47.3Telangana
4 7.1Haryana
46.6Kerala
45.0Uttar Pradesh
44.7Punjab
41.3West Bengal
41.3Jharkhand
41.2Bihar
50Investment Friendliness Index
Maharashtra
Maharashtra records an overall
score of 53.7, ranking second
in both the L category and at
the pan-India level. The state’s
score is driven by its leading
performance in the business
climate pillar. The score is
further supported by a strong
performance in the resources
and financial health pillars, with
infrastructure and regulatory
ease areas for improvement.
Its business climate score is
driven by the state attracting
the highest share of PE/VC
investments, i.e. 35% of the
investments in the country,
along with the highest number
of ATLs at 1,033, i.e. 10% of
the total ATLs in the country.
Maharashtra’s performance
in the business climate pillar
is driven by its economic
indicators, featuring a GSDP
per capita of Rs 216,710, which
ranks 11th among 36 states
and Union Territories.
Maharashtra is also in the top
five states in resources on
account of having the highest
budget among the states for
skilling, while ranking second
in terms of renewable resource
potential as well.
It scores in the top five in the
financial health pillar because
of its lowest fiscal deficit as a
percentage of GSDP among the
large states (3.94% in fiscal
2024).
and efficient power sector, driven
by competitive industrial and
commercial power costs and
well-contained transmission
and distribution (T&D) losses.
The state offers power to
industrial users at ~29% below
the pan-India average. Electricity
downtime in the state is also low,
with an average power supply
of 23.8 hours a day (4% higher
than the large state average),
thus providing reliable and
uninterrupted power supply to
businesses.
Gujarat ranks in the top five
states in business climate,
fuelled by high exports at ~31%
of India’s merchandise exports,
nearly two times the next highest
state, and a robust GSDP growth
rate, ranking third overall during
fiscal 2019-2024. Further, the
business climate is bolstered
by the presence of 614 ATLs as
of fiscal 2025. The state has 1.24
ATLs per lakh population, which
is ~19% higher than the average
for the L category. A healthy
presence of ATLs helps foster
innovation and entrepreneurship
across the state.
Gujarat also scores well on the
financial health pillar because it
has the lowest fiscal deficit as
a percentage of GSDP (2.81%)
among the states, as of fiscal
2024. Its sound financial health is
also evidenced by its outstanding
liabilities as a percentage of
GSDP, which remains well-
managed and sustainable at
~18%, ~40% below the average
for the large states.
Results 51
Tamil Nadu
Tamil Nadu records an
overall score of 53.3, ranking
third at the pan-India level
and the L category. Tamil
Nadu’s score is driven by its
strong performance in the
infrastructure and business
climate pillar, with financial
health emerging as an area for
improvement.
The state’s first rank in
the infrastructure pillar
among large states can be
explained by its efficient port
infrastructure, with it ranking
third in turnaround time at
ports weighted by capacity,
low electricity downtime
(4% below the large state
average) and contained T&D
losses (~3% below large state
average).
Its score in the business
climate pillar is because the
state has the second-highest
number of ATLs in India and an
MoU conversion rate of nearly
100%. Investors commended
the state on its consistency in
terms of policies. Tamil Nadu
is also excelling in export
performance, with its export-
to-GSDP ratio 36% higher
than the category average.
Figure 16: Performance of hilly and northeastern states
47.5Uttarakhand
47.3Assam
46.1Himachal Pradesh
45.0Tripura
43.0Meghalaya
41.2Nagaland
40.2Jammu and Kashmir
39.9Mizoram
37.5Arunachal Pradesh
36.6Sikkim
32.3Manipur
2 7. 0Ladakh
Note: Scores are out of 100
Scores have been rounded to one decimal place, though calculations were carried out to three decimal places
52Investment Friendliness Index
Assam
Assam records an overall score
of 47.3, ranking second among
northeastern and hilly states
and 14th overall. The score
is primarily driven by sound
financial health and good
institutional environment, with
minimal impact from labour
disruptions. However, there are
areas for improvement within the
resources pillar.
Assam’s performance in
institutional environment is
driven by low severity of labour
disruptions and perceived
consistency in state policies.
The state’s focus on education is
visible through an average of 18%
allocation of its budget towards
education between fiscals 2019
and 2024 compared with the hilly
and northeastern states’ average
of ~12%.
Assam’s financial health pillar
is supported by a controlled
level of interest payments at
2.8% of GSDP (24% lower than
the average across hilly and
northeastern states), reflecting
prudent fiscal management and
stability in the state’s finances.
Top three performers: Hilly and northeastern states
Uttarakhand
Uttarakhand records an overall
score of 47.5, ranking first among
northeastern and hilly states and
11th overall. Its strengths include
human resources, characterised by
a strong inflow of graduates into
the workforce. The state excels in
the number of individuals entering
the workforce as a percentage of
the population, which is also the
highest percentage of workforce
entrants among the northeastern
and hilly states. However, there
is scope for improvement within
the infrastructure pillar.
The state offers good banking
facilities and financial availability,
complemented by a favourable
industrial environment. This is
evidenced from the fact that the
number of functioning offices of
commercial banks per capita is
20% higher than the average for
hilly and northeastern states.
Further, the credit provided by
banks to industry as a percentage
of manufacturing GSDP is ~66%
higher than the average for hilly
and northeastern states. The state
provides a seamless and efficient
experience for businesses, with
all government-related paperwork
processed through a single-
window online platform in a short
timeframe.
Also, in 2024, the number of patents
filed was 1,637, which was higher
than the pan-India average by 28%.
This indicates a robust environment
for innovation and a commitment
to fostering intellectual property
development.
Results 53
Himachal Pradesh
Himachal Pradesh achieves an
overall score of 46.1, ranking
third among northeastern and
hilly states and 17th overall.
This score is primarily driven by
its performance in the resources
pillar, bolstered by strong
women workforce participation
and effective institutional
performance. However, there is
scope for improvement within
the environment resilience pillar.
Himachal Pradesh’s strong
performance in the resources
pillar is driven by a notable
proportion of people entering the
workforce as a percentage of the
population (1.1%), high women
worker population share of 62.3%
(18.0% higher than the average
for hilly and northeastern states)
and a robust overall labour force
participation rate of 63.3%, which
is comfortably above the category
average of 48.0%.
The state’s strength in
institutional environment is
supported by a low cybercrime
rate of 1.12 offences per lakh
population (~45% lower than
the average crime rate for hilly
and northeastern states), an
effective grievance redressal
mechanism and a conducive
regulatory environment, all of
which contribute to a stable and
supportive climate for residents
and businesses.
Figure 17: Performance of Union Territories and City States
DNH & DD – Dadra and Nagar Haveli and Daman and Diu; A&N – Andaman and Nicobar Islands
Note: Scores are out of 100
Scores have been rounded to one decimal place, though calculations were carried out to three decimal places
49.9
53.1Goa
Delhi
4 7. 0Chandigarh
44.9Puducherry
3 7.1DNH & DD
30.2A&N Islands
24.5Lakshadweep
54Investment Friendliness Index
Top three performers: Union territories and city states
Goa
Goa records an overall score
of 53.1, topping the rankings
for City States and ranking
fourth at the pan-India level.
Goa’s strong performance is
driven by the highest scores in
both resources and regulatory
ease pillars, with a respectable
performance in Infrastructure
as well. However, institutional
environment has emerged as an
area for improvement.
Goa has the highest spending as
a percentage of GSDP on skilling
and healthcare investments,
aiding its performance under
the resources pillar. A high
proportion of STEM enrolment
(25% of higher education
enrolment is in STEM courses),
which supports a skilled and
technology-oriented workforce,
further aids its performance
in resources. Goa secures
the highest rank in the Union
Territories and City States
category with respect to STEM
enrolment as a percentage
of total enrolment in higher
education. Additionally, it ranks
well in vocational training
capacity and secures 1st rank
among Union Territories and City
States on this indicator.
Its strong performance under
the infrastructure pillar is on
account of two international
airports, which account for 3%
of the capacity of all airports in
India. Its port capacity is also
3% of the total in India, with
dedicated terminals for handling
containers, dry bulk and POL
(petroleum, oil, and lubricants)
products. This is despite Goa
only accounting for 0.35% of
India’s GDP contribution.
The state has the highest share
of renewables in its power mix
across all states and Union
Territories, and also scores well
on the low share of T&D losses
at just ~7%.
Delhi
Delhi achieves an overall score of 49.9, ranking second among City States and sixth overall. This
score is primarily driven by its performance in the infrastructure pillar, supported by adequate cargo capacity as well as sound financial health. However, there
are areas for improvement within the institutional environment pillar.
Delhi’s infrastructure pillar is
supported by its second rank in
airport cargo capacity relative
to manufacturing GVA, and a
rail network of 84 km despite
its small land area. T&D losses
were ~12% in fiscal 2023 (13%
lower than the City States and
Union Territories average), and
it maintained an average of 24
hours of power supply (ranks first
among Union Territories and City
States), indicating no downtime.
These factors collectively ensure
efficient connectivity and reliable
Results 55
Chandigarh
Chandigarh achieves an overall
score of 47, ranking third among
City States and 16th overall. This
score is primarily driven by its
performance in the infrastructure
and resources pillars, supported
by a high inflow of tech workforce.
However, there are notable areas
for improvement within the
institutional environment pillar.
Chandigarh’s top ranking in the
infrastructure pillar is supported
by it achieving the highest rail
density across states and Union
Territories. Its industrial power
cost is also 11% lower than
the Union Territories and City
States average, enhancing its
attractiveness for businesses.
Additionally, strong 4G and 5G
penetration is reflected in a
high number of base transceiver
stations (BTSs), with nearly 31 BTS
per sq km (2.5 times the average
for Union Territories and states
category), ensuring robust digital
connectivity.
Chandigarh’s strong performance
in the resources pillar is
demonstrated by its first rank
across all states/Union Territories
in the addition of new technical
workforce as a percentage
of population (2.5 times the
average for Union Territories
and City States). Additionally,
workforce participation is notable,
with 2.42% of the population
entering the workforce annually
as graduates and postgraduates,
which is 92% higher than the
category average.
The charts below provide a
scoring of all states across the
eight pillars.
power supply for businesses
and residents.
In the financial health pillar,
Delhi benefits from outstanding
liabilities of just 5.2% of its
GSDP (significantly lower
than the Union Territories and
City States average of ~9.4%)
and a gross fiscal deficit of
0.7% of GSDP, 57% below the
average for City States and
Union Territories. This reflects
prudent fiscal management
and contributes to its overall
financial stability.
56Investment Friendliness Index
9.1
9.6
10.1
10.5
10.5
10.7
10.9
11.2
11.4
11.4
11.5
12.0
12.1
12.3
12.6
13.6
13.7
Chhattisgarh
Jharkhand
Karnataka
Telangana
Madhya Pradesh
Rajasthan
Bihar
Uttar Pradesh
Maharashtra
Odisha
Haryana
Punjab
Andhra Pradesh
West Bengal
Kerala
Tamil Nadu
Gujarat
6.9
7.8
7.9
7.9
8.6
8.9
9.4
10.0
10.2
10.2
10.7
11.2
Ladakh
Manipur
Sikkim
Nagaland
Mizoram
Meghalaya
Jammu & Kashmir
Tripura
Arunachal Pradesh
Uttarakhand
Assam
Himachal Pradesh
6.2
7.6
9.4
10.5
14.0
14.0
15.0
Lakshadweep
A & N Islands
DNH & DD
Puducherry
Delhi
Goa
Chandigarh
3.2 State scores: Across pillars and overall
Pillar - Infrastructure
Note: Scores are out of 25 and states are scored relative to
the performance of other states
Top performers Frontrunners Emerging
performers
Aspiring states
Large states
Northeastern and hilly states
City states and UTs
Results 57
9.4
9.3
9.2
9.2
8.0
7.8
7.2
7.2
6.9
6.6
6.3
5.9
5.7
5.5
5.2
4.5
4.4
Maharashtra
Karnataka
Tamil Nadu
Gujarat
Haryana
Telangana
Odisha
Punjab
Andhra Pradesh
Uttar Pradesh
Kerala
Rajasthan
Chhattisgarh
Madhya Pradesh
Bihar
West Bengal
Jharkhand
7.8
7.0
6.4
6.3
6.2
6.2
5.6
5.5
5.5
5.3
5.0
4.6
Sikkim
Uttarakhand
Assam
Jammu & Kashmir
Himachal Pradesh
Arunachal Pradesh
Mizoram
Ladakh
Nagaland
Tripura
Meghalaya
Manipur
5.0
5.5
6.0
6.2
6.4
8.4
9.3
Lakshadweep
A & N Islands
Puducherry
Chandigarh
DNH & DD
Goa
Delhi
Pillar - Business climate
Note: Scores are out of 20 and states are scored relative to
the performance of other states
Top performers Frontrunners Emerging
performers
Aspiring states
Large states
Northeastern and hilly states
City states and UTs
58Investment Friendliness Index
8.2
8.1
8.0
7.7
7.7
7.2
6.7
6.7
6.6
6.3
5.7
5.6
5.4
5.4
5.3
5.2
4.8
Odisha
Maharashtra
Chhattisgarh
Madhya Pradesh
Rajasthan
Andhra Pradesh
Tamil Nadu
Karnataka
Telangana
Gujarat
Uttar Pradesh
Kerala
Jharkhand
Bihar
Haryana
West Bengal
Punjab
7.2
7.1
6.0
5.8
5.7
5.3
5.1
4.7
4.7
4.6
4.1
3.6
Himachal Pradesh
Uttarakhand
Meghalaya
Manipur
Sikkim
Assam
Tripura
Mizoram
Jammu & Kashmir
Arunachal Pradesh
Ladakh
Nagaland
3.7
4.6
5.1
5.3
6.0
6.4
8.3
Lakshadweep
A & N Islands
Delhi
DNH & DD
Puducherry
Chandigarh
Goa
Pillar - Resources
Note: Scores are out of 15 and states are scored relative to
the performance of other states
Top performers Frontrunners Emerging
performers
Aspiring states
Large states
Northeastern and hilly states
City states and UTs
Results 59
5.4
5.1
4.8
4.6
3.8
3.6
3.5
3.1
3.1
3.0
2.8
2.6
2.6
2.5
2.3
2.0
1.7
Madhya Pradesh
Gujarat
Rajasthan
Odisha
Maharashtra
Telangana
Karnataka
Haryana
Andhra Pradesh
Tamil Nadu
Uttar Pradesh
Jharkhand
Kerala
Chhattisgarh
Bihar
Punjab
West Bengal
4.9
4.7
4.6
4.0
3.1
2.2
2.1
1.9
1.8
1.7
0.9
0.8
Assam
Nagaland
Tripura
Jammu & Kashmir
Himachal Pradesh
Meghalaya
Uttarakhand
Sikkim
Arunachal Pradesh
Mizoram
Manipur
Ladakh
0.7
0.8
1.4
1.8
2.6
2.6
4.8
A & N Islands
Lakshadweep
DNH & DD
Delhi
Goa
Chandigarh
Puducherry
Pillar - Government policy
Note: Scores are out of 10 and states are scored relative to
the performance of other states
Top performers Frontrunners Emerging
performers
Aspiring states
Large states
Northeastern and hilly states
City states and UTs
Kerala
Jharkhand
60Investment Friendliness Index
8.4
8.1
8.1
8.0
7.9
7.9
7.9
7.7
7.5
7.3
7.3
7.3
7.1
7.0
6.9
6.4
6.2
Chhattisgarh
Rajasthan
Punjab
Tamil Nadu
Gujarat
Kerala
Madhya Pradesh
Andhra Pradesh
Telangana
Maharashtra
Haryana
Uttar Pradesh
West Bengal
Bihar
Odisha
Jharkhand
Karnataka
8.5
8.2
8.2
7.9
7.7
7.7
7.2
7.2
6.0
4.8
3.7
3.2
Meghalaya
Nagaland
Tripura
Himachal Pradesh
Uttarakhand
Assam
Mizoram
Jammu & Kashmir
Arunachal Pradesh
Manipur
Sikkim
Ladakh
2.9
4.4
5.4
6.7
7.1
7.5
8.5
Lakshadweep
A & N Islands
Puducherry
DNH & DD
Delhi
Chandigarh
Goa
Pillar - Regulatory ease
Note: Scores are out of 12 and states are scored relative to
performance of other states.
Top performers Frontrunners Emerging
performers
Aspiring states
Large states
Northeastern and hilly states
City states and UTs
Results 61
Pillar - Institutional environment
Top performers Frontrunners Emerging
performers
Aspiring states
Note: Scores are out of 6 and states are scored relative to
performance of other states.
4.5
4.4
4.4
4.3
4.1
4.1
4.0
3.9
3.9
3.3
2.8
2.3
Nagaland
Tripura
Meghalaya
Himachal Pradesh
Uttarakhand
Mizoram
Assam
Jammu & Kashmir
Arunachal Pradesh
Manipur
Sikkim
Ladakh
2.9
3.5
3.7
3.8
3.8
3.8
3.8
3.9
3.9
3.9
4.0
4.0
4.1
4.2
4.2
4.3
4.5
Telangana
Karnataka
Odisha
Jharkhand
Rajasthan
Bihar
Maharashtra
Andhra Pradesh
West Bengal
Haryana
Uttar Pradesh
Kerala
Gujarat
Tamil Nadu
Madhya Pradesh
Punjab
Chhattisgarh
2.2
3.2
3.2
3.5
3.7
3.8
3.9
Lakshadweep
Puducherry
DNH & DD
A & N Islands
Delhi
Chandigarh
Goa
Large states
Northeastern and hilly states
City states and UTs
62Investment Friendliness Index
6.7
6.5
6.3
5.6
5.6
5.4
4.7
4.7
4.5
4.5
4.0
4.0
4.0
3.8
3.6
3.1
2.9
Gujarat
Odisha
Maharashtra
Jharkhand
Karnataka
Chhattisgarh
Haryana
Telangana
Tamil Nadu
Uttar Pradesh
Andhra Pradesh
Madhya Pradesh
Bihar
Kerala
Rajasthan
West Bengal
Punjab
5.4
4.8
4.6
3.8
3.8
3.6
3.4
3.1
2.6
1.9
1.1
0.8
Uttarakhand
Assam
Mizoram
Tripura
Meghalaya
Sikkim
Nagaland
Himachal Pradesh
Manipur
Ladakh
Arunachal Pradesh
Jammu & Kashmir
1.8
2.0
2.1
3.3
4.3
5.6
7.0
Lakshadweep
A & N Islands
DNH & DD
Chandigarh
Goa
Puducherry
Delhi
Pillar - Financial health
Top performers Frontrunners Emerging
performers
Aspiring states
Note: Scores are out of 7 and states are scored relative to the
performance of other states.
Large states
Northeastern and hilly states
City states and UTs
Results 63
4.0
4.0
3.9
3.9
3.9
3.8
3.7
3.7
3.6
3.6
3.6
3.5
3.4
3.4
3.3
3.1
2.7
Tamil Nadu
Chhattisgarh
Kerala
Andhra Pradesh
Odisha
Telangana
Karnataka
Gujarat
Madhya Pradesh
Maharashtra
Rajasthan
Punjab
West Bengal
Jharkhand
Haryana
Uttar Pradesh
Bihar
4.3
3.9
3.9
3.8
3.5
3.5
3.5
3.3
3.1
3.1
2.5
2.2
Meghalaya
Jammu & Kashmir
Uttarakhand
Arunachal Pradesh
Tripura
Assam
Mizoram
Nagaland
Himachal Pradesh
Sikkim
Manipur
Ladakh
1.8
1.9
2.0
2.2
2.5
3.0
3.4
Lakshadweep
Delhi
A & N Islands
Chandigarh
DNH & DD
Goa
Puducherry
Pillar - Environment resilience
Note: Scores are out of 5 and states are scored relative to
the performance of other states.
Top performers Frontrunners Emerging
performers
Aspiring states
Large states
Northeastern and hilly states
City states and UTs
64Investment Friendliness Index
Top performers Frontrunners Emerging
performers
Aspiring states
Figure 18: Performance of states on Investment Friendliness Index
Results 65
Table 2: Rank and score of states on Investment Friendliness Index
Rank State/Union Territory Overall score
1 Gujarat 56.6
2 Maharashtra 53.7
3 Tamil Nadu 53.3
4 Goa 53.1
5 Odisha 52.4
6 Delhi 49.9
7 Madhya Pradesh 48.9
8 Andhra Pradesh 48.7
9 Karnataka 48.7
10 Rajasthan 48.1
11 Uttarakhand 47.5
12 Chhattisgarh 47.5
13 Telangana 47.3
14 Assam 47.3
15 Haryana 4 7.1
16 Chandigarh 4 7. 0
17 Kerala 46.6
18 Himachal Pradesh 46.1
19 Uttar Pradesh 45.0
20 Tripura 45.0
21 Puducherry 44.9
22 Punjab 44.7
23 Meghalaya 43.0
24 West Bengal 41.3
25 Jharkhand 41.3
26 Bihar 41.2
27 Nagaland 41.2
28 Jammu & Kashmir 40.2
29 Mizoram 39.9
30 Arunachal Pradesh 37.5
31 DNH & DD 3 7.1
32 Sikkim 36.6
33 Manipur 32.3
34 A & N Islands 30.2
35 Ladakh 2 7. 0
36 Lakshadweep 24.5
Investment Friendliness Index Investment Friendliness Index
66
67
Conclusion
The Government of India recognises the importance of creating
a conducive business environment to attract investments and
stimulate economic growth. States play a crucial role in driving
such investments. To effectively monitor and evaluate the
performance of states on this front, an index that combines
publicly available data with investor perceptions is essential.
It will help in assessing the investment attractiveness of the
states, facilitating the creation of an Investment Friendliness
Index. The index, thus conceived, includes measurable
indicators and perception-based metrics that reflect the on-
ground investment environment.
Based on this index, states can gain valuable insights into how
they perform on parameters critical to investors, allowing them
to identify areas of strength and weakness. Additionally, the
index will enable states to understand best practices from their
peers, fostering a culture of continuous improvement.
The index has a recurrent nature and is assessed at set intervals.
This is intended to provide states with a clear understanding of
how their actions translate into improvements in both data and
investor perception.
By offering a fair and transparent assessment framework,
this study will promote healthy competition among states,
encouraging them to enhance their investment climate and
attract more investments.
68Investment Friendliness Index
State profiles 69
Chapter 4:
State profiles
State profilesInvestment Friendliness Index 70 67
Andaman and Nicobar Islands
Area: 8,249 sq km
GSDP per capita: Rs 212,576
Agriculture share of GVA (FY23): 4.2%
Industry share of GVA (FY23): 19.6%
Services share of GVA (FY23): 76.2%
FDI inflow (FY24): Not available
*
Key industries: Food processing
Key enable rs
•Institutional environment
•Infrastructure
Data score (65) Survey score (35)
Areas needing improvement
• Government policy
Key performance indicators
• GSDP per capita
Indicators for improvement
• Share of renewables in power
generation capacity
Overall
Rank
Score
Category
rank34/36
30.2
C | 6/7
State category
L – Large state
C – City state
N – Northeastern/hilly state
17.6 12.6
* “Not available” indicates nonavailability of published data
State profilesInvestment Friendliness Index 66 71
Andaman and Nicobar Islands attain an overall score of 30.2, placing it sixth among City States/
Union Territories and 34th overall. The islands are renowned for their peaceful culture and low crime
rate. However, there are notable opportunities for improvement within the government policy.
Key factors driving the State score
•The score Andaman and Nicobar Islands is afunction of its performance in the institutional
environment pillar and infrastructure. However,
its overall score is weighed down by its
performance in the government policy pillar
•Andaman and Nicobar Island’s performance inthe institutional environment pillar is driven
by a relatively low crime rate (~47% lower thanthe average crime rate for Union Territories and
city states)
•In the infrastructure pillar, Andaman and Nicobar
does well on account of its strong airportcapacity. It scored 32 % higher than its category
average in airport capacity per capita
•In the business climate pillar, Andaman and
Nicobar Islands demonstrate commendableperformance, with new companies registered
in fiscal 2024 accounting
for 15.7% of existing
companies (~33% above the average for Union
Territories and city states). Its GSDP per capita
is Rs 212,576 compared with a
category average
of Rs 230,037
• Additionally, Andaman and Nicobar Islands has 79 commercial bank offices, resulting in 20.47 commercial bank offices per one lakh population compared with 31 for the category, supporting financial inclusion and economic activity despite its relatively low population
• In the government policy pillar, there is significant scope for improvement in indicators, such as MoU conversion rate and capex incentive disbursed, which is leading to a relatively lower score in this pillar
• Within the resources pillar, indicators that warrant improvement include vocational training capacity, where the region ranks 31st, and low STEM enrolment, which stands at just 14% of total higher education enrolment. Both aspects are essential for developing a skilled workforce and fostering innovation
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
31%
7%
37%
58%
28%
39%
31%
27%
Best statePillar average
State profilesInvestment Friendliness Index 72 69
Andhra Pradesh
Area: 160,205 sq km
GSDP per capita: Rs 161,243
Agriculture share of GVA (FY23): 11.8%
Industry share of GVA (FY23): 29.6%
Services share of GVA (FY23): 58.6%
FDI inflow (FY24): $92.13 million
Key industries: Food processing, chemicals,
pharmaceuticals
Key enable rs• Good infrastructure
• Abundance of resources
Data score (65) Survey score (35)
Areas needing improvement
•Financial health
Key performance indicators
• Low electricity downtime
• High STEM enrollment
Indicators for improvement
•State’s total outstanding
liabilities/GSDP
Overall
Rank
Score
Category
rank8/36
48.7
L | 6/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
26.5 22.2
State profiles
73
State profilesInvestment Friendliness Index
68 73
Andhra Pradesh has an overall score of 48.7, ranking sixth in the large state category and
eighth overall. Andhra Pradesh’s score is driven by its performance in infrastructure,
highest digital transactions per capita across all states and UTs, and the resources pillar,
with further improvement to the score weighed down by a below-average score in the
financial health pillar.
Key factors driving the State score
•Andhra Pradesh ranks 6th in the large category
of states on account of the strength of its infrastructure and resources, but weighed down by its low financial health where it scores lower than the pillar average
•Its strong digital infrastructure is evident in
the highest digital transactions per capita
(approximately 18, compared with the average of
just 4.8 among the large states)
•Low electricity downtime, with an average power supply of 23.71 hours compared
with the category average of 22.7 hours and
T&D losses of 14% compared with ~18%, aids its performance in the infrastructure pillar
•Andhra Pradesh does well in both natural as well
as human resources, accounting for a 10th of
India’s non-metallic production (by value) and
the 5th highest renewable resource potential share (approximately 8%) among states. Notably,
Andhra Pradesh has the highest share of STEM enrolments as a percentage of higher education enrolments (48% as of fiscal 2022)
•The State’s institutional environment score aligns with the national average, indicating mixed performance in perception indicators. Scores related to the perception of the severity of labour disruptions and the regulatory environment are below the pan-India average,
while scores relating to the consistency of state policies and grievance redressal mechanisms are above the pan-India average
•The score in the financial health pillar is impacted by the State’s outstanding liabilities
amounting to around 35% of its GSDP, 13% higher than the average of large states, and
its fiscal deficit at more than twice the target set by the 15th finance commission
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
48%
31%
64%
65%
58%
78%
48%
34%
Best statePillar average
Key factors driving the State score
• Andhra Pradesh ranks 6th in the large category
of states on account of the strength of its
infrastructure and resources, but weighed down
by its low financial health where it scores lower
than the pillar average
• Its strong digital infrastructure is evident in the highest digital transactions per capita (approximately 18, compared with the average of just 4.8 among the large states)
• Low electricity downtime, with an average power supply of 23.71 hours compared with the category average of 22.7 hours and T&D losses of 14% compared with ~18%, aids its performance in the infrastructure pillar
• Andhra Pradesh does well in both natural as well as human resources, accounting for a 10th of India’s non-metallic production (by value) and the 5th highest renewable resource potential share (approximately 8%) among states. Notably, Andhra Pradesh has the highest share of STEM
enrolments as a percentage of higher education enrolments (48% as of fiscal 2022)
• The State’s institutional environment score aligns with the national average, indicating mixed performance in perception indicators. Scores related to the perception of the severity of labour disruptions and the regulatory environment are below the pan-India average, while scores relating to the consistency of state policies and grievance redressal mechanisms are above the pan-India average
• The score in the financial health pillar is impacted by the State’s outstanding liabilities amounting to around 35% of its GSDP, 13% higher than the average of large states, and its fiscal deficit at more than twice the target set by the 15th finance commission
State profilesInvestment Friendliness Index 74 71
Voices from the ground
Areas of strength
• The Visakhapatnam port is an advantage for
seafood exporters, offering efficient cargo
handling and access to international routes,
making it an attractive location for businesses
in the sector.
• Andhra Pradesh’s seaports are notable for their strong throughput and expansion plans, while the railway network provides solid freight support, despite some gaps in corridors and coverage.
• The State is home to a range of modern industrial parks, including Sri City, Jawaharlal Nehru Pharma City and APIIC estates, which offer ready-to-use infrastructure, reliable utilities and strong connectivity, making them prime destinations for high-value investments.
• Andhra Pradesh has well-developed cold storage and warehousing infrastructure, which is essential for the seafood industry, with good availability, although costs are slightly higher than in some other locations.
Areas of focus
• While major IT hubs like Vizag have good connectivity, the quality of internal roads in
tier-2 and 3 locations could be improved, with more consistent maintenance and upgrades to ensure smooth transportation.
• Airports in the State may benefit from enhancements to their cargo facilities and route networks, as well as efforts to improve profitability, to provide more comprehensive transportation options for businesses.
• Although policies are generally clear and investor-friendly, the disbursement of financial incentives could be streamlined to reduce bureaucratic delays and enhance business confidence.
• The process of obtaining utility connections, such as power and water, could be made more efficient, with reduced requirements for multiple clearances and improved inter- departmental coordination.
• While Andhra Pradesh has measures in place for disaster management, further investments in infrastructure resilience, early warning systems, and business continuity planning could help mitigate the impact of natural disasters on businesses.
• Andhra Pradesh has stable pro-industry policies, with clear incentives and investment frameworks. However, changes with political cycles and gaps in implementation affect long- term predictability.
State profilesInvestment Friendliness Index 70 75
Arunachal Pradesh
Area: 83,743 sq km
GSDP per capita: Rs 148,056
Agriculture share of GVA (FY23): 10.8%
Industry share of GVA (FY23): 26.8%
Services share of GVA (FY23): 62.4%
FDI inflow (FY24): Not available
*
Key industries: Beverages, basic metals
Key enable rs
•Environment resilience
•Favourable institutional environment
Data score (65) Survey score (35)
Areas needing improvement
•Business climate
•Financial health
Key performance indicators
• Ease of obtaining construction permits
• Perceived consistency in State policies
Indicators for improvement
• Exports as a % of GSDP
Overall
rank
Score
Category
rank30/36
37.5
N | 9/12
State category
L – Large state
C – City state
N – Northeastern/hilly state
19 18.5
* Not available” indicates nonavailability of published data
State profilesInvestment Friendliness Index 76 73
Arunachal Pradesh achieves an overall score of 37.5, ranking 9th among northeastern/hilly
States and 30th overall. This score is primarily driven by environment resilience within the
State and effective institutional performance. However, there are significant areas for
improvement within the business climate and financial health pillars.
Key factors driving the State score
•Arunachal Pradesh’s overall score is driven
by a healthy performance in the institutional
environment and regulatory ease pillars, while
the financial health and business climate
pillars present opportunities for improvement
•The State’s performance in the institutional
environment pillar is supported by a favourableregulatory environment (67 compared with thecategory average of 61) and a low cyber-crimerate of 1.01 offences per lakh population (~50%lower than the average for hilly and northeastern
States), contributing to a secure and stable
business setting
•The State demonstrates strong performance
in the regulatory ease pillar, particularly in
utility connections for electricity and water,
achieving perception scores that are 9 pointshigher than the category average
•The State’s performance in the financial
health pillar presents scope for improvement.
Its total outstanding liabilities as a percentage
of GSDP was approximately 56% in fiscal
2024 (~84%
higher than the average for hilly and northeastern
States). Further, the
State’s gross fiscal deficit
as a percentage of GSDP was 72% higher than
the average in its category.
• The State can enhance its business climate pillar by improving GSDP per capita, which stands at Rs 148,056 and ranks 19th among all States and UTs by focusing on tourism, agriculture and food processing. It can improve bank credit to industry, which is only at 3.7% of GSDP (below the ~5% average for hilly and northeastern States)
Voices from the ground
Areas of strength
•The frequency of voltage fluctuation is
remarkably low, and power outages are rare,
ensuring a reliable and stable power supply
•Vast pool of skilled and unskilled labour with
a diverse range of skills, readily available in
various industrial sectors
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
I
nstitutional environment
Financial health
Environment resilience
31%
18%
50%
65%
16%
76%
41%
31%
Best statePillar average
State profilesInvestment Friendliness Index 72 77
Assam
Area: 78,438 sq km
GSDP per capita: Rs 100,322
Agriculture share of GVA (FY23): 8.8%
Industry share of GVA (FY23): 47.6%
Services share of GVA (FY23): 43.6%
FDI inflow (FY24): $0.23 million
Key industries: Coke and refined petroleum
products, chemicals
Key enable rs •Strong government policy
•Favourable institutional environment
Data score (65) Survey score (35)
Areas needing improvement
• Business climate
Key performance indicators
• Low interest burden
• Minimal impact of labour disruptions
Indicators for improvement
• Exports as a percentage of GSDP
• Incubators per lakh population
Overall
Rank
Score
Category
rank14/36
47.3
N | 2/12
State category
L – Large state
C – City state
N – Northeastern/hilly state
25.9 21.4
•Resources
State profilesInvestment Friendliness Index 78 75
With an overall score of 47.3, Assam ranks second among northeastern and hilly states
and 14th overall. This score is largely driven by strong government policy and a favourable
institutional environment, with minimal impact from labour disruptions. However, there
is scope for improvement within the business climate and resources pillar .
Key factors driving the State score
•Assam has performed well on the government
policy and institutional environment
parameters, and maintained a respectable
position within the financial health pillar.
However, its overall investment appeal
is limited by its weak performance on the
resources climate and business parameters,
highlighting areas of potential growth
•The government policy outperformance can
be attributed to the strong capex incentives
disbursed as a percentage of its total industrial
capex in fiscal 2024 (nearly five times the average
for hilly and northeastern states)
•Assam also scores well on its focus on improving
road infrastructure, with the State allocating an
average of 8% of its annual expenditure to roads
between fiscals 2019 and 2024, compared with a
pan-India average of 3%
•Assam’s focus on education is evident from
an average of 18% allocation of its budget toeducation over fiscals 2019-2024, compared
with the average of ~12% for hilly and
northeastern States. Despite the allocation to
education, scope for improvement exists in its
ability to produce technical workforce, as new
technical workforce added as a percentage of
population is only 0.01%, compared with a pan-
India average of 0.014%
•Assam’s financial health pillar is supported by
a controlled level of interest payments, at 2.8%
of GSDP (24% lower than the average across
hilly and northeastern states), reflecting
prudent fiscal management and stability in the
State’s public finances
•Institutional environment is another pillar
in which Assam performs well, driven
by low
severity of labour disruptions and perceived
consistency in State policies
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
35%
49%
64%
67%
69%
70%
43%
32%
Best statePillar average
State profilesInvestment Friendliness Index 74 79
• The State can further strengthen its
infrastructure pillar by increasing the number
of international airports, as it currently has
just one with international operations. Assam
also ranked 21st among all States and UTs in
cold storage capacity relative to manufacturing
GVA, indicating scope for improvement in
supply chain support. Additionally, the State
ranked 35th (second last) in the availability
of industrial area for allotment as a share of
total land, as per the India Industrial Land
Bank (IILB) database, highlighting a significant
lost opportunity to attract new investments
and industries
• Business climate presents opportunities for enhancement, with GSDP per capita at approximately Rs 1 lakh (33% lower than average GSDP per capita for hilly and northeastern states), indicating scope for increased economic output. Exports as a percentage of GSDP stood at 1.2% in fiscal 2024, suggesting potential to strengthen the State’s global market integration. The presence of only two incubators per lakh population points to room for further development in entrepreneurship and innovation infrastructure. Additionally, private equity and venture capital inflows stood at Rs 158.4 million in fiscal 2024 (PE and VC inflows as a percentage of GSDP are ~42% lower than the average for hilly and northeastern states), underscoring the
need to attract greater investment to
support business growth
Voices from the ground
Areas of strength
• The State has strong transportation and digital infrastructure, supporting industrial operations. Road construction quality is good, and rail connectivity along with freight-carrying capacity is robust, enabling efficient movement of goods across regions. The digital infrastructure is also reliable, allowing industries to operate with modern, technology-driven processes
• The region has attracted several large companies, along with cooperatives that have established successful manufacturing operations. The presence of these enterprises underscores the region’s growing industrial ecosystem. Their investments signal confidence in the business environment and
contribute to broader economic activity and
employment generation
• The State’s policy framework is welcoming and provides attractive incentives for new and expanding industries. Consistently pro- investment policies have supported the establishment of multiple units, offering competitive advantages to businesses looking to scale operations
• Key regulatory processes such as land allotment, environmental clearances, and construction permits are transparent and efficient. The land allotment process is viewed as highly transparent, while environmental clearances are processed in a timely manner. The construction permit process also operates with clarity, helping industries achieve quicker project execution
Areas of focus
• Road quality in certain areas can be further improved. Strengthening road conditions across more regions would enhance connectivity
and support smoother logistics and
workforce movement
• Air connectivity to tier-II and tier-III cities offers room for improvement. Expanding flight routes and improving airport infrastructure in these locations would make travel and cargo movement more efficient, benefiting businesses operating beyond major urban centres
• Power supply reliability needs to be strengthened. Frequent interruptions affect overall development, not just industrial operations. More consistent and resilient power infrastructure would support long-term growth across sectors
• Industrial parks can be upgraded further to improve their functionality. Enhancements around infrastructure, utilities, and facilities within industrial parks would help create a more competitive and industry-ready environment
• Additional warehousing capacity would benefit businesses across sectors. Expanding storage infrastructure, particularly in key industrial clusters, would support smoother supply chain management and reduce logistical bottlenecks
State profilesInvestment Friendliness Index 80 77
• Availability of skilled workers can be improved
through targeted, industry-relevant skilling
initiatives. Developing focused programs that
align with industry needs would help address
labour shortages and ensure a steady pipeline of
trained talent.
• The single-window system can be made more efficient. Streamlining processes, improving digital responsiveness, and easing procedural requirements would make approvals more seamless for investors.
• Utility connections can be more easily accessible and faster to obtain. Reducing the time taken for electricity, water, and other essential connections would facilitate quicker project initiation and improve ease of doing business.
State profilesInvestment Friendliness Index 76 81
Bihar
Area: 94,163 sq km
GSDP per capita: Rs 44,705
Agriculture share of GVA (FY23): 10.4%
Industry share of GVA (FY23): 22.1%
Services share of GVA (FY23): 67.5%
FDI inflow (FY24): $0.16 million
Key industries: Coke and refined petroleum
products, food processing
Key enable rs• Good infrastructure
• Abundance of resources
Data score (65) Survey score (35)
Areas needing improvement
• Business climate
Key performance indicators
• High railway density
• Strong spending on education
Indicators for improvement
• Patent applications filed
Overall
Rank
Score
Category
rank26/36
41.2
L | 17/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
21.8 19.4
State profilesInvestment Friendliness Index 82 79
Bihar has an overall score of 41.2, ranking 17th among large states and 26th overall. This score
is primarily driven by its performance in the infrastructure and resources pillars. However, there
is significant scope for improvement within the business climate and financial health pillar .
Key factors driving the State score
•Bihar is an emerging performer state, with good
performance on the infrastructure and resources
parameters, and scope for improvement within
business climate
and financial health
•It is among the top performers on road density
and rail density. Despite occupying only 2.9% of
the country’s land mass, Bihar accounts for 4%
of national highways, 8% of rural roads and 5.7%
of the rail track length of the country
•Bihar also performs well on cold storage capacity,
scoring 23% above the category average
•In the resources pillar, Bihar’s performance
is driven by strong government spending on
education as a percent of its GSDP (46% higher
than the average for large states)
•There are significant opportunities for
improvement in Bihar’s business climate, with
GSDP per capita at just Rs 44,000 (~72% lowerthan the average for large states), indicating
scope for greater economic output. Patent
applications filed as a percentage of active
companies stood at just 0.48% in fiscal 2023
(average for large states was ~3.6%), highlighting
potential to foster innovation
•Bank credit
to industry stands at about 6.7%
of GSDP, suggesting room to enhance financial
support for businesses. Additionally,
Bihar
ranks 32nd in the share of medium and small enterprises within its MSME base, indicating the
need to develop a more dynamic and resilient industrial ecosystem
•A near 500 bps higher than the average total outstanding liabilities/GSDP across the 36 states
and UTs indicates an area for improvement in the
financial health pillar
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
36%
23%
58%
64%
57%
55%
44%
26%
Best statePillar average
State profilesInvestment Friendliness Index 78 83
Voices from the ground
Areas of strength
• Bihar has made significant strides in improving
its electricity and water infrastructure, with a
notable enhancement in the availability and
reliability of these essential services.
• Bihar has simplified its environmental clearance process, reducing bureaucratic hurdles and enabling faster project approvals.
Areas of focus
• Bihar lacks air connectivity to Tier 2 & 3 cities, hindering accessibility.
• While the condition of electricity in Bihar is satisfactory, there is still a need for further improvement to ensure reliable and uninterrupted 24/7 power availability.
• Bihar currently lacks a dedicated industrial park or a well-established industrial infrastructure, which is a significant deterrent to attracting large-scale investments, fostering
entrepreneurship, and driving economic growth in the State. The absence of a robust industrial ecosystem hinders the development of key sectors, such as manufacturing, logistics, and exports, thereby limiting the State’s economic potential.
• Bihar’s digital infrastructure can be strengthened to improve connectivity, communication, and overall digital ecosystem.
• Investor confidence in Bihar is hindered by concerns over safety and security, which deters potential investors from committing investments in the State. The perception of inadequate law and order, coupled with instances of crime and unrest, creates a risk-averse environment that makes it challenging for Bihar.
• The limited job opportunities in Bihar have a notable impact on the overall quality of life for its residents.
• The land allotment process in Bihar is often complex and challenging, involving lengthy procedures and bureaucratic hurdles
State profilesInvestment Friendliness Index 84 81
Chandigarh
Area: 114 sq km
GSDP per capita: Rs 338,816
Agriculture share of GVA (FY23): 0.0%
Industry share of GVA (FY23): 9.1%
Services share of GVA (FY23): 90.9%
FDI inflow (FY24): $30.88 million
Key enable rs
• Good infrastructure
• Abundance of resources
Data score (65) Survey score (35)
Areas needing improvement
•Institutional environment
•Business climate
Key performance indicators
• Low power cost
• High technical workforce inflow
Indicators for improvement
• Crime rate – Economic crimes
Overall
Rank
Score
Category
rank16/36
47
C | 3/7
State category
L – Large state
C – City state
N – Northeastern/hilly state
24.9 22.1
State profilesInvestment Friendliness Index 80 85
With an overall score of 47, Chandigarh ranks third among City States/Union Territories and 16th
overall. This score is largely
driven by its strong performance in the infrastructure and
resources pillars, supported by a high inflow of tech workforce. However, there is notable scope
for improvement within the institutional environment and business climate pillar .
Key factors driving the State score
•Chandigarh excels in the infrastructure pillar,ranking first among all states and UTs, and
demonstrates strong performance in resources.However, its overall score is weighed down bycomparatively weak performance in businessclimate and institutional environment
•Chandigarh’s top ranking in the infrastructurepillar is supported by it topping rail densityacross states and UTs. The city also offers a
low industrial power cost (11% lower than
the
average for UTs and city-states), enhancing
its attractiveness for businesses. Additionally,
strong 4G and 5G penetration is reflected in
a high number of BTS, with nearly 31 BTS per
square km (2.5 times the
average for UTs and
states), ensuring robust digital connectivity
• The city’s strong performance in the resources
pillar is demonstrated by its first rank across
all states/UTs in the addition of new technical
workforce as a percentage of population (2.5
times the average for UTs and city-states)
• Workforce participation is notable, with 2.42% of the population entering the workforce annually as graduates and postgraduates, which is 92% higher than the average for UTs and city-states
• In the business climate pillar, Chandigarh ranks 29th on the ATL indicator with just 22 labs, and new companies registered in fiscal 2024 accounted for only 7% of total businesses in the State (vs the UT and city-state average of 11.75%). Additionally, Chandigarh ranks 33rd on the startups registered indicator, reflecting a modest number of startups compared with the total number of companies. These areas present scope for improvement in fostering innovation and new business growth
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
42%
26%
63%
64%
47%
44%
60%
31%
Best statePillar average
State profilesInvestment Friendliness Index 86 83
•In the institutional environment pillar, the city
faces challenges with a crime rate of 29 economic
offences per lakh population (37% higher than
the average for UTs and city-states) and issues
within the regulatory environment, both of which
present opportunities for improvement
Voices from the ground
Areas of strength
• Chandigarh boasts a workforce that is notably
skilled, with both unskilled and skilled labour
being better than in many other cities across
India
• The law enforcement agencies in Chandigarh are well-positioned, demonstrating a strong presence
• The power supply in Chandigarh is commendable. The electricity department operates efficiently, ensuring reliable service for residents and businesses alike
Areas of focus
• Connectivity between old and new airport terminals can be improved
• To improve the airport experience, it is recommended that the government reopen the old terminal for domestic flights without delay. This action would help decongest the current facility and restore efficient service for travellers. Furthermore, the new terminal should be dedicated solely to international operations, which would enhance immigration and customs services to align with global standards.
State profilesInvestment Friendliness Index 82 87
Chhattisgarh
Area: 135,192 sq km
GSDP per capita: Rs 120,067
Agriculture share of GVA (FY23): 9.0%
Industry share of GVA (FY23): 52.8%
Services share of GVA (FY23): 38.2%
FDI inflow (FY24): $50.5 million
Key industries: Basic metals, non-metallic
mineral products
Key enable rs •Abundance of resources
•Environment resilience
Data score (65) Survey score (35)
Areas needing improvement
• Infrastructure
Key performance indicators
• High share in coal and lignite
production
• Low seismic threat
Indicators for improvement
• Digital transactions per capita
Overall
Rank
Score
Category
rank12/36
47.5
L | 9/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
23.7 23.8
•Business climate
88
Investment Friendliness Index State profilesInvestment Friendliness Index
88 85
Chhattisgarh attains an overall score of 47.5, ranking 9th among large states and 12th overall.
Key strengths include an abundance of natural resources, such as coal and lignite, and
environment resilience. It has opportunities to improve in the infrastructure pillar,
particularly in digital infrastructure, and business climate pillar
Key factors driving the State score
•Chhattisgarh records a strong performance in the resources and environment resilience pillars. However, there is scope for improvement in the infrastructure and business climate pillars, which could further enhance its overall development and investment attractiveness
•Its strong performance in the resources pillar is driven by its 14% share in the production of metallic mineral and 11.2% in non-metallic (both by value) for fiscal 2024, ranking second and
third, respectively. It constitutes 20% of India’s coal and lignite production and ranks second
•The female worker population ratio stands at 58.1% (~41% higher than the average for large states), positively impacting workforce dynamics
•The State demonstrates strength in the environment resilience pillar with a favourable perception of its
disaster preparedness, scoring nine points higher than large state average, which enhances its overall safety and stability
•Chhattisgarh lagged in the infrastructure pillar, ranking 23rd in airport capacity per capita as of fiscal 2023, pointing to the need of an upgrade in the segment. Its rail network accounts for just 2% of India’s total rail length despite comprising 4% of the country’s land area. Additionally, digital transactions lag at 0.42 per capita (~92% below the average for large states), indicating scope for improvement in connectivity and need for digitalisation of services
•In the business climate pillar, GSDP per capita is ~Rs 1.2 lakh (~24% lower than the average for large states), with the State ranking 24th. Exports remained modest at ~5.5% of the GSDP in fiscal 2024 (~68% below the average for large states). Chhattisgarh ranks 22nd in incubators per capita. Private equity and venture capital
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
53%
25 %
70%
74%
77%
79%
37%
28%
Best statePillar average
Key factors driving the State score
• Chhattisgarh records a strong performance
in the resources and environment resilience
pillars. However, there is scope for improvement
in the infrastructure and business climate
pillars, which could further enhance its overall
development and investment attractiveness
• Its strong performance in the resources pillar is driven by its 14% share in the production of metallic mineral and 11.2% in non-metallic (both by value) for fiscal 2024, ranking second and third, respectively. It constitutes 20% of India’s coal and lignite production and ranks second
• The female worker population ratio stands at 58.1% (~41% higher than the average for large states), positively impacting workforce dynamics
• The State demonstrates strength in the environment resilience pillar with a favourable perception of its disaster preparedness, scoring
nine points higher than large state average, which enhances its overall safety and stability
• Chhattisgarh lagged in the infrastructure pillar, ranking 23rd in airport capacity per capita as of fiscal 2023, pointing to the need of an upgrade in the segment. Its rail network accounts for just 2% of India’s total rail length despite comprising 4% of the country’s land area. Additionally, digital transactions lag at 0.42 per capita (~92% below the average for large states), indicating scope for improvement in connectivity and need for digitalisation of services
• In the business climate pillar, GSDP per capita is ~Rs 1.2 lakh (~24% lower than the average for large states), with the State ranking 24th. Exports remained modest at ~5.5% of the GSDP in fiscal 2024 (~68% below the average for large states). Chhattisgarh ranks 22nd in incubators per capita. Private equity and venture capital
State profilesInvestment Friendliness Index 84 89
investment inflow was just 0.02% of the all-India
PE/VC capital inflow. These indicators highlight
opportunities to stimulate economic growth,
improve the innovation ecosystem and attract
investments
Voices from the ground
Areas of strength
• The legal and associated costs for closing a business in Chhattisgarh are competitive, which can provide reassurance to investors and entrepreneurs considering their exit strategies
• From a power supply perspective, Chhattisgarh benefits from a surplus of electricity, which is available to industries at reasonable prices. This reliable energy supply is a significant advantage for businesses operating in the State
Areas of focus
• The single-window clearance facility faces challenges, which may hinder the efficiency of business operations in the State
• Despite approval from the Centre, the implementation of e-documentation has not yet materialised, which if done, could streamline processes for businesses
• The condition of roads along the borders of Chhattisgarh with neighbouring states, including Jharkhand, may pose challenges for the transport system and affect logistics for industries
• The digital infrastructure requires enhancement, as it currently does not meet the needs of businesses reliant on digital capabilities. The absence of a no objection certificate (NOC) for trunk internet capability could become a significant bottleneck for industries operating in the digital space
• While Chhattisgarh is emerging as a developing hub, there is a need for improved skill development and workforce training initiatives. Although efforts are underway to train the workforce, additional support structures will be essential to facilitate the growth and expansion of this hub
State profilesInvestment Friendliness Index 90 87
Dadra and Nagar Haveli and Daman and Diu
Area: 602 sq km
GSDP per capita: Not available
*
Agriculture share of GVA (FY23): Not available
*
Industry share of GVA (FY23): Not available
*
Services share of GVA (FY23): Not available
*
FDI inflow (FY24): $9.24 million
Key industries: Rubber and plastics products,
chemicals, electrical equipment
Data score (65) Survey score (35)
Overall
Rank
Score
Category
rank31/36
37.1
C | 5/7
State category
L – Large state
C – City state
N – Northeastern/hilly state
18.8 18.3
Key enable rs
•Supportive business climate
•Regulatory ease
Areas needing improvement
•Infrastructure
•Financial health
Key performance indicators
• High share of medium and
small MSMEs
Indicators for improvement
• Road density
* ‘Not available’ indicates nonavailability of published data
State profiles
91
State profilesInvestment Friendliness Index
86 91
Dadra and Nagar Haveli and Daman and Diu have attained an overall score of 37.1, ranking fifth
among City States/Union Territories and 31st overall. Strengths include regulatory ease and a
supportive business climate, as indicated by a high share of MSMEs.
However, there are significant opportunities for improvement within the infrastructure
and financial health pillars.
Key factors driving the State score
•The score is driven by the business climate and
regulatory ease pillars but weighed down by
the infrastructure pillar
•In the business climate pillar, it performs strongly
in the proportion of MSEs within the total MSME
base, ranking first among all states and UTs in
this indicator
•Dadra and Nagar Haveli and Daman and Diu does
well in the regulatory ease pillar on account of
ease of obtaining utility connections where it performs better than its category average. The UT also demonstrates good performance with respect to ease of contract enforcement and
access to commercial courts and scores ~ 4
points above its category average
•The UT also demonstrates strength in the resources pillar, with a labour force participation rate of 61%
•STEM enrolment as a percentage of higher education enrolment was 20% in fiscal 2022,
~30% higher than the average for UTs and
citystates
•The UT can improve its performance in the financial health pillar by managing its
interest expenses and fiscal liabilities more prudently
•Under the infrastructure pillar, there is scope for improvement in road density, where the UT
ranks 34th overall. Additionally, 31% of the
UT’s area is available for allotment as industrial area according to the IILB, 8% higher than the category average
Voices from the ground
Areas of focus
•A single window clearance policy must be introduced as the current process is fragmented and time-consuming in providing approvals for businesses and investors
•A shortage of skilled and unskilled labour is prevalent
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
36%
14%
56%
53%
30%
50%
38%
32%
Best statePillar average
Key factors driving the State score
• The score is driven by the business climate and
regulatory ease pillars but weighed down by the
infrastructure pillar
• In the business climate pillar, it performs strongly in the proportion of MSEs within the total MSME base, ranking first among all states and UTs in this indicator
• Dadra and Nagar Haveli and Daman and Diu does well in the regulatory ease pillar on account of ease of obtaining utility connections where it performs better than its category average. The UT also demonstrates good performance with respect to ease of contract enforcement and access to commercial courts and scores ~ 4 points above its category average
• The UT also demonstrates strength in the resources pillar, with a labour force participation rate of 61%
• STEM enrolment as a percentage of higher education enrolment was 20% in fiscal 2022,
~30% higher than the average for UTs and city states
• The UT can improve its performance in the financial health pillar by managing its interest expenses and fiscal liabilities more prudently
• Under the infrastructure pillar, there is scope for improvement in road density, where the UT ranks 34th overall. Additionally, 31% of the UT’s area is available for allotment as industrial area according to the IILB, 8%higher than the category average
Voices from the ground
Areas of focus
• A single window clearance policy must be introduced as the current process is fragmented and time-consuming in providing approvals for businesses and investors
• A shortage of skilled and unskilled labour is prevalent
State profilesInvestment Friendliness Index 92 89
Delhi
Area: 1,483 sq km
GSDP per capita: Rs 399,013
Agriculture share of GVA (FY23): 0.0%
Industry share of GVA (FY23): 15.5%
Services share of GVA (FY23): 84.5%
FDI inflow (FY24): $6,523.43 million
Key industries: Food processing, RMG
Key enable rs
•Infrastructure
•Sound financial health
Data score (65) Survey score (35)
Areas needing improvement
•Environment resilience
•Government policy
Key performance indicators
• Airport cargo capacity
• Controlled fiscal deficit
Indicators for improvement
• Crime rate
• Air quality index (AQI)
Overall
Rank
Score
Category
rank6/36
49.9
C | 2/7
State category
L – Large state
C – City state
N – Northeastern/hilly state
29.0 20.9
State profilesInvestment Friendliness Index 88 93
Delhi has an overall score of 49.9, ranking second among City States/Union Territories and sixth
overall. The score is driven by its strong performance in the infrastructure pillar, supported by an
adequate cargo capacity and sound financial health. However, there is room for improvement
within the environment resilience and government policy pillars.
Key factors driving the State score
•Delhi demonstrates a strong performance in
the infrastructure and financial health
pillars, with scope for improvement in
the
environment resilience and government
policy pillars, which could enhance its overall
competitiveness
•Delhi’s infrastructure pillar is supported by
its second rank on airport cargo capacity relative
to manufacturing GVA, and an extensive rail
route
network of 184 km despite its small land
area
•T&D losses stood at ~12% in fiscal 2023
(13%lower than the average for city states
and UTs).
Delhi maintained an average of
24 hours of power supply (ranking first
among UTs and city states), indicating virtually
no downtime. These
factors ensure efficient
connectivity and reliable
power supply for
businesses and residents
•In the financial health pillar, Delhi benefits
from outstanding liabilities at just 5.2% of
its
GSDP
(significantly lower than the average of 9.4%
f
or UTs and city states) and a gross fiscal deficit
of only 0.7% of GDP (57% below the average for
city states and UTs). This reflects prudent fiscal
management and contributes to overall financial
stability
•Delhi’s performance in the government policy
pillar is weighed down by its underperformance
in indicators such as incentive allocation and
capex incentive disbursed
•In the institutional environment pillar, Delhi
faces challenges pertaining to
a crime rate of
30 offences per
lakh population (43% above the
average of UTs and city states of 21)
•Delhi shows significant scope for improvement
in the environment resilience pillar. The city’s
AQI fell in
the poor range (201-300) for 130
days and in the very poor range (301-400)
for 66 days during 2022
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
34%
18%
59%
62%
100%
39%
56%
47%
Best statePillar average
State profilesInvestment Friendliness Index 94 91
• Additionally, there are concerns regarding
regulatory environment and perceptions of
the effectiveness of its grievance redressal
mechanisms, where its perception scores
are equal to the category average for both
indicators. Strengthening these areas can
enhance governance and the overall investment
environment
Voices from the ground
Areas of strength
• The railway network has undergone significant improvements, making it a reliable option for transporting containers. Earlier, wagons would often get stuck at intermediate stations for extended periods, causing disruptions. The current system allows for smooth transportation. The online platform has
also added transparency and efficiency
• Power supply is stable with no major outages and the digital infrastructure is robust, offering high-speed connectivity and wide coverage
Areas of focus
• Delhi NCR’s road network is well-developed, with most roads well-maintained by the government. However, certain stretches, particularly in outer Delhi, require improvement. Waterlogging on highways and roads during monsoon remains a significant concern
• Creation of industrial parks often focused on securing grants rather than functionality remains a concern. Many remain non-operational. A better approach would be for the government to provide land parcels with basic infrastructure, allowing industries to build customised facilities. This issue needs attention to support industrial growth in the region
State profilesInvestment Friendliness Index 90 95
Goa
Area: 3,702 sq km
GSDP per capita: Rs 439,596
Agriculture share of GVA (FY23): 2.1%
Industry share of GVA (FY23): 53.3%
Services share of GVA (FY23): 44.6%
FDI inflow (FY24): $35.1 million
Key industries: Pharmaceuticals, medicinal,
chemical and botanical products
Key enable rs• Good infrastructure
• Abundance of resources
Data score (65) Survey score (35)
Areas needing improvement
•Institutional environment
Key performance indicators
• High airport capacity
• Significant budget for skilling
Indicators for improvement
• Fiscal liabilities
Overall
Rank
Score
Category
rank4/36
53.1
C | 1/7
State category
L – Large state
C – City state
N – Northeastern/hilly state
28.8 24.3
State profilesInvestment Friendliness Index 96 93
Goa has an
overall score of 53.1, topping City States/Union Territories and ranking fourth
overall. Goa’s strong performance is driven by
its highest scores in the resources and
regulatory ease pillars, with institutional environment being an area of improvement.
Key factors driving the State score
•Ranked first in the city/UT category and fourth
overall, Goa stands out as the top performer
under the resources and regulatory ease
pillar and second under the infrastructure pillar
•It has the highest spending as a percentage of
GSDP on skilling and healthcare investments,
aiding its performance under the
resources pillar.
A high proportion of STEM enrolment (25% of
higher education enrolment is in STEM courses),
which supports a skilled and technology-
oriented workforce, further aids its performance
in resources
•Goa secured the highest rank in the UTs and
city states category in STEM enrolment as a
percentage of total enrolment in higher education
Additionally, Goa ranks high in vocational training
capacity and secured the first rank among UTs
and city states in this indicator
•Its strong performance under the infrastructurepillar can be attributed to its two internationalairports, accounting for 3% capacity of allairports in
India. Its port capacity is 3% of the
total in India, along with dedicated terminals
for handling containers, dry bulk and POL. This
is despite Goa accounting
for only 0.35% of
India’s GDP. The State has the highest share of renewables in its power mix across all states and UTs, while also displaying only 7% of
T&D losses
•Goa can enhance its institutional environment by addressing the impact
of labour disruptions,
which should help create a more stable
and
predictable business environment
•There is scope for improving the fiscal deficit,
with Goa’s deficit at 6.7% of GDP in fiscal 2024,
higher than
that of its peers in the same category
and more than double the range provided by the 15th Finance Commission
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
56%
26%
71%
66%
61%
60%
56%
42%
Best statePillar average
State profilesInvestment Friendliness Index 92 97
• Additionally, strengthening the regulatory
environment could streamline processes and
improve the overall ease of doing business
Voices from the ground
Areas of strength
• Goa boasts of robust transportation network, with well-connected roads and an efficient railway system that enables seamless and reliable movement of goods
• Its power supply is reliable, with minimal outages and manageable voltage fluctuations, providing a stable and consistent energy infrastructure that supports the needs of industries
• It offers ample warehouse storage capacity, strategically located with excellent transportation connectivity, facilitating efficient logistics and supply chain management
• Goa offers a readily available workforce with a diverse range of skills and expertise, providing a strong foundation for businesses to tap into and leverage for their operational needs
Areas of focus
• Although labour strikes are relatively rare, there is still room for enhancement in labour law compliance, particularly through the implementation of more efficient online systems and streamlined dispute resolution processes, which can minimise disruptions and promote a smoother operating environment
• The environmental clearance process is currently hampered by lengthy timelines, cumbersome paperwork and a lack of transparency in costs, highlighting the need for a more streamlined and efficient system, including a simpler online process and faster approval timelines
State profilesInvestment Friendliness Index 98 95
Gujarat
Area: 196,244 sq km
GSDP per capita: Rs 264,232
Agriculture share o
f GVA (FY23): 8.5%
Industry share of GVA (FY23): 50.5%
Services share of GVA (FY23): 41.0%
FDI in
flow (FY24): $7,300 million
Key industries: Coke and refined petroleum
products, chemicals, food processing
Key enable rs
•Good infrastructure
•Sound financial health
Data score (65) Survey score (35)
Areas needing improvement
• Resources
Key performance indicators
• Low turnaround time for ports
• Low debt obligations
Indicators for improvement
• New technical workforce added
each year as a % of population
Overall
Rank
Score
Category
rank1/36
56.6
L | 1/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
33.2 23.4
State profilesInvestment Friendliness Index 94 99
Gujarat has an overall score of 56.6, topping the ranking for the index. Gujarat’s score is driven
by its strong performance across infrastructure, business climate, financial health,
regulatory ease and government policy
pillars, with the areas of improvement being
resources, institutional environment and environment resilience pillars.
Key factors driving the State score
•Gujarat tops the overall rankings, given its strong
performance in infrastructure, business climate,
financial health, regulatory ease and
government policies
•Gujarat’s high rank in infrastructure is driven by
its efficient port operations (lowest turnaround
time weighted by capacity for major and non-
major 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% below the pan-India average.
Electricity downtime is low, with an average
power supply of 23.8 hours a day
(4% higher than
the large states’ average), providing reliable and
uninterrupted power supply for businesses
•Gujarat’s performance in the infrastructure pillar
is driven by its good road density, accounting for
10% of the total length of state highways in India
(nearly four times the pan-India average) and the highest envisaged length of national expressways (635 km). Rail density is also high, comprising 7% of the country’s total rail network, which is 2.5 times the pan-
India average, supporting robust freight and passenger movement. This is despite the State accounting for ~6% of the land area
• Gujarat ranks among the top five states in
business climate, fuelled by high exports at 31%
of India’s merchandise exports, nearly two times
the next highest state, and a robust GSDP growth
rate ranking third overall over fiscals 2019-2024.
Further, the business climate was bolstered by
the presence of 614 ATLs as of fiscal 2025. The
State has 1.24 ATLs per lakh population, which
is ~19% higher than the average of the large
states category. A healthy number of ATLs helps
foster innovation and entrepreneurship across
the State
State’s relative perf
ormance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
42%
51%
66%
69%
96%
74%
55%
46%
Best statePillar average
State profilesInvestment Friendliness Index 100 97
•The State maintains a GSDP per capita of Rs
2,64,232 (67% higher than the average of the
large states) and is ranked fifth among 36 states
and UTs, reflecting robust economic output and
prosperity. Additionally, Gujarat has a healthy
proportion of MSEs
within its MSME base
(ranking fourth in this indicator), contributing to
a dynamic and resilient industrial ecosystem
•Gujarat stands out as one of the top states for its
sound financial health because it had the lowest
fiscal deficit as a percentage of GSDP (2.81%)
among states as of fiscal 2024. Its sound
financial health is also evidenced by its
outstanding liabilities as a percentage of GSDP
that remains well-managed and sustainable at
just around the 18% mark, ~40% below the
average of the large states
•Gujarat has opportunities to enhance its
resources pillar by expanding the technical
workforce added each year as a percentage of
population, which stood at 0.012% as of fiscal
2023. This will support innovation and advanced
manufacturing
•Expenditure on healthcare stands at 5.9% of
total capital expenditure, compared with the
best-performing state at 8.7%, indicating there
is scope to prioritise healthcare investments for
broader development
Voices from the ground
Areas of strength
• Gujarat’s ICDs are well-connected facilitating
the smooth movement of goods
• The State has developed several high-quality industrial parks, such as Sanand, Dholera SIR and GIFT City, which offer plug-and-play infrastructure, excellent utility access, and seamless connectivity to ports and highways, making it easy for businesses to set up and operate
• Gujarat promotes plug-and-play facilities, enabling quick setup of operations with well- developed accommodation and common
amenities, as seen in parks such as Dahej, Jhagadia and Saykha
• The biannual Vibrant Gujarat Summit has been successful in attracting many investment commitments from domestic and international investors, demonstrating the State’s strong institutional support and efficient investor- friendly clearance systems
• The iNDEXTb is highly proactive and investor- friendly, offering single-window clearance, end- to-end facilitation and aftercare support, with a strong reputation among global investors for quick responsiveness and efficient coordination with other departments
• Gujarat is widely recognised for its policy continuity and long-term stability, with industrial and sectoral policies designed with clear multi-year horizons and minimal mid-term changes, providing a predictable environment for businesses
• The State offers a streamlined and transparent process for obtaining NOCs with reasonable costs and timely approvals, facilitating ease of doing business
• Labour disruptions have a low-to-moderate impact on business operations, partly due to government-imposed strike bans on essential services, ensuring a relatively stable labour environment
Areas of focus
• Although private ports operate efficiently, there is a noticeable disparity in the maintenance and management of state-run Gujarat Maritime Board ports, reflecting scope for improvement to ensure seamless cargo handling and transportation
• Gujarat’s workforce productivity and satisfaction with technical skills remain moderate, with scope for improvement through better alignment of training with real-time industry needs, to enhance the overall quality of the workforce.
State profilesInvestment Friendliness Index 96 101
• Providing sector-specific certification and tools
exposure, particularly for the pharmaceutical,
electronics and automotive industries, can help
upskill workers and improve their proficiency in
domain-specific software and technical tools
• While Gujarat’s national highways are well- maintained, the internal roads managed by municipal authorities require improvement as they cause delays, affecting commute times and overall productivity
State profilesInvestment Friendliness Index 102 99
Haryana
Area: 44,212 sq km
GSDP per capita: Rs 248,310
Agriculture share of GVA (FY23): 7.9%
Industry share of GVA (FY23): 33.2%
Services share of GVA (FY23): 58.9%
FDI inflow (FY24): $1,907.79 million
Key industries: Automobile
Key enable rs
• Good infrastructure
• Supportive business climate
Data score (65) Survey score (35)
Areas needing improvement
• Resources
Key performance indicators
• Ample industrial land availability
• Strong PE and VC inflows
Indicators for improvement
• Share of renewables in power
generation
Overall
Rank
Score
Category
rank15/36
47.1
L | 11/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
26.0 21.1
State profilesInvestment Friendliness Index 98 103
Haryana has an overall score of 47.1, ranking 11th in the large state category and 15th overall. The
score is driven by its performance in the business climate and infrastructure pillars, with areas
of improvement in the resources pillar.
Key factors driving the State score
•Haryana leads in terms of industrial area
available for allotment/total
land area of state.
The availability of industrial land for allotment
supports new investments and industrial
expansion
•Haryana has performed strongly in both the
business climate and infrastructure pillars.
However, its overall score is weighed down
by comparatively weak performance in the
resources, regulatory ease and
environment resilience pillars, indicating
areas where focused improvements could
further enhance
Haryana’s investment appeal
•The State’s infrastructure pillar performance is
bolstered by high rail density, ranking seventh in
this metric. The State also performs well in digital
transactions (12.42 digital
transactions per
capita, ~ 2.4x the pan-India average), reflecting
widespread adoption of digital financial services
•The State has the highest private equity/ venture
capital investments as a percentage of GSDP
among all states and UTs, which underscores its
attractiveness to investors and startups. It also
demonstrates strong own tax revenue collection,
which accounts for 12%
of its GSDP, higher
than the pan-India average of 9.8% in fiscal
2024, supporting fiscal stability and public
investment
•Haryana can further strengthen its resources
pillar by improving the female workforce
participation rate, which stood at 23.6% as of
fiscal 2024, below the pan-India level of ~40%.
Additionally, increasing state expenditure
on
education, which was 10.3% of GSDP in fiscal
2023 and ranked 26th among the 36 states
and UTs, would help build a more
skilled and
competitive workforce for future growth
•There is room for improvement in the share of
renewable energy in the State power mix, which
is ~4% below the category average
State’s relative perf ormance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
35%
31%
61%
66%
67%
66%
46%
40%
Best statePillar average
State profilesInvestment Friendliness Index 104 101
Voices from the ground
Areas of strength
• The State’s transport ecosystem supports
industry through regional connectivity. Rail
corridors operate smoothly with consistent
freight capacity.
• The State has a well-developed logistics ecosystem, supported by cold storage, warehousing, and efficient digital infrastructure. Cold storage and warehousing facilities are readily available, supporting sectors that depend on temperature-controlled supply chains and organised storage capacity
• Internet connectivity and the broader digital infrastructure are strong, enabling modern, technology-driven operations
• Utility connections—such as electricity and water—are generally easy to obtain, contributing to a smoother setup process for new and expanding businesses
Areas of focus
• Road quality and overall connectivity can be strengthened further. Improving road conditions and enhancing linkages to key industrial areas would support smoother logistics movement and improve accessibility for businesses operating across the State
• There is scope to upgrade storage infrastructure and improve maintenance around train stations. Additional loading/unloading areas and expanded storage capacity would benefit industries with significant freight requirements. Better upkeep of railway stations would also help streamline cargo handling and multimodal logistics
• Power supply reliability varies across locations, creating room for more consistent service.
While some areas receive stable power, others experience frequent outages. Enhancing grid reliability across all industrial pockets would provide a uniform operating environment for businesses
• Connectivity from industrial parks to major transportation hubs can be improved. Strengthening linkages to airports, ports and major railway junctions would reduce transit time and improve overall logistics efficiency for industries located within these parks
• Greater clarity and communication around the Investment Promotion Agency (IPA) would be beneficial. Improved awareness and easier access to information on available schemes and incentives would help businesses make more informed investment decisions and increase scheme utilisation
• Availability of skilled labour can be enhanced through targeted skilling and industry development initiatives. Some sectors face challenges in sourcing skilled workers, partly due to workforce migration to other states. Focused skilling programmes, along with developing sector-specific infrastructure and opportunities, would help retain talent and support industry growth
• The single-window system can be made more efficient, even though some processes such as construction permits remain transparent. Optimising workflows and improving responsiveness would help streamline approvals and make the overall process more seamless for investors
• Flood-related challenges require long-term mitigation measures. Addressing drainage and water management issues would enhance resilience during heavy rainfall and create a more reliable operating environment for industries
State profilesInvestment Friendliness Index 100 105
Himachal Pradesh
Area: 55,673 sq km
GSDP per capita: Rs
200,030
Agriculture share of GVA (FY23):
7.3%
Industry share o
f GVA (FY23): 46.4%
Services share of GVA (FY23): 46.3 %
FDI in
flow (FY24): $56 million
K
ey industries: Pharmaceuticals,
medicinalchemical and botanical products
Key enable rs
•Favourable institutional environment
•Abundance of resources
Data score (65) Survey score (35)
Areas needing improvement
•Environment resilience
Key performance indicators
• Low crime rate – economic and cyber
• Strong female workforce participation
Indicators for improvement
• Number of landslide events
Overall
Rank
Score
Category
rank18/36
46.1
N | 3/12
State category
L – Large state
C – City state
N – Northeastern/hilly state
23.4 22.7
•Business climate
State profilesInvestment Friendliness Index 106 103
With an overall score of 46.1, Himachal Pradesh ranks third among northeastern and hilly
states and 18th overall. The score is largely driven by its strong performance in the resources
pillar, bolstered by high female workforce participation and robust institutional performance.
However, there is scope for improvement within the environment resilience and business
climate pillar s.
Key factors driving the State score
•The performance of Himachal Pradesh in the
resources and institutional environment
pillars is strong, with scope for improvement
in the business climate and environment
resilience pillars. This could further enhance
the State’s overall investment environment
•The State’s strong performance in the resources
pillar is driven by a notable proportion of people
entering the workforce as a percentage of the
population (1.1% against a category average of
0.8%), a high female worker population ratio of
62.3% (18% higher than the average for hilly and
northeastern states), and a robust labour force
participation rate of 63.3%, which is comfortably
above the average 48% for hilly and northeastern
states
•The State’s strength in institutional environment
is supported by a low cybercrime rate of 1.12
offences per one lakh population (~45%
lower than the average crime rate for hilly and
northeastern states), an effective grievance
redressal mechanism (65 points compared with
the categ
ory average of 61), and a conducive
regulatory environment (68 against 59), all of
which contribute to a stable and supportive
climate for residents and businesses
•In the business climate pillar, Himachal Pradesh
can enhance its performance by increasing
capital expenditure, which was 7.6% of GSDP
in fiscal 2024 (~56% lower than the average for
hilly and northeastern states). FDI inflows were
modest at $56 million in fiscal 2024, ranking
the highest in its category. The share of medium
and small enterprises within the MSME base
was only 0.9%, indicating significant scope
for improvement in investment and industrial
diversification
•In the environment resilience pillar, ~16%of
Himachal Pradesh’s land area falls within
earthquake zones IV and V. The State
experienced 1,561 landslides between 2000
and 2017. These factors highlight the need for
enhanced risk mitigation, disaster preparation
and management and resilience strategies
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
48%
31%
66%
71%
45%
63%
45%
31%
Best statePillar average
State profilesInvestment Friendliness Index 102 107
Voices from the ground
Areas of strength
• The workforce in Himachal Pradesh exhibits a
strong willingness to engage in the wellness
tourism sector, particularly catering to seniors.
This commitment is complemented by the
availability of training facilities, ensuring that the
workforce is well-equipped with the necessary
skills to provide quality services in this growing
industry
• The State has made significant strides in improving its infrastructure to enhance disaster preparedness. Despite the recent tragedies, the authorities demonstrated readiness and resilience in managing these situations effectively
Areas of focus
• Investors pointed out that the rail network needs improvement. Currently, the rail transport system does not fully meet the needs for business logistics. There is a significant need to enhance last-mile connectivity, which is essential for ensuring efficient transport solutions
• Investors also pointed out the absence of well- defined land laws
State profilesInvestment Friendliness Index 108 105
Jammu and Kashmir
Area: 222,236 sq km
GSDP per capita: Rs 110,122
Agriculture share of GVA (FY23): 8.1%
Industry share of GVA (FY23): 26.4%
Services share of GVA (FY23): 65.5%
FDI inflow (FY24): $0.25 million
Key industries: Chemicals, pharmaceuticals,
medicinal and botanical products
Key enable rs •Government policy
•Favourable institutional environment
Data score (65) Survey score (35)
Areas needing improvement
•Infrastructure
•Financial health
Key performance indicators
• Strong pace of new business
registrations
Indicators for improvement
• Electricity downtime
Overall
Rank
Score
Category
rank28/36
40.2
N | 7/12
State category
L – Large state
C – City state
N – Northeastern/hilly state
19.7 20.5
State profilesInvestment Friendliness Index 104 109
Jammu and Kashmir records an overall score of 40.2, ranking seventh among northeastern
and hilly states and 28th overall. Strengths include a favourable institutional environment
and government policy, with infrastructure and financial health emerging as areas for
improvement.
Key factors driving the State score
•Jammu and Kashmir’s score is driven by its
institutional environment and government
policy pillars. However, its overall score is
weighed down by weaker performance in the
financial health and infrastructure pillars
•In the business climate pillar, Jammu and
Kashmir's score is driven by the State’s own
tax
revenue at 15% of GSDP in fiscal 2024,
~70%
above the average for hilly
and
northeastern states
•New companies registered accounted
for 21%
of existing companies in fiscal 2024, placing
Jammu and Kashmir 34% above the average for
the hilly and northeastern states category
•J&K performs well in the government policy
pillar due to healthy incentive allocations
and disbursement. Incentive allocation as a
percentage of its annual state budget was 5.5
times above the average for hilly and northeastern
states. J&K ranks first in its category in terms of
capex incentive allocation as a percentage of
total industrial capex
•In the financial health pillar, interest
payments stand at 7
.13% of GSDP, nearly double
the average for hilly and northeastern states. The
gross fiscal deficit is nearly 9% of GSDP, the
State ranking 29th overall. These figures
highlight the
need for improvement in fiscal
management
•As part of the
infrastructure pillar, average daily
power supply stands at 19.9 hours, indicating
notable electricity downtime compared with
states
having near-continuous supply. 4G/5G
penetration remains low with a BTS density of
0.82
per sq km, highlighting opportunities to
enhance connectivity and service reliability
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
31%
40%
60%
66%
12%
78%
38%
31%
Best statePillar average
State profilesInvestment Friendliness Index 110 107
Voices from the ground
Areas of strength
• Rail connectivity, along with freight carrying
capacity is robust, enabling efficient movement
of goods across regions. The digital infrastructure
is also reliable, allowing industries to operate
with modern, technology-driven processes
Areas of focus
• Obtaining good road conditions has been one of the more challenging aspects of doing business in Kashmir. While some improvements have been made, the experience remains mixed. Frequent damage to roads, poor maintenance and inadequate connectivity to rural areas hinder
smooth transportation, leading to inconvenience
• The region faces a significant shortage of skilled labour, hindering productivity and growth. The workforce in J&K lacks specialised skills, relying heavily on traditional methods. This scarcity of skilled labour is a major challenge, impacting various industries and sectors
• The single window system, designed to streamline processes and facilitate ease of doing business, is not functioning optimally in Jammu and Kashmir. Despite its intended benefits, the system is often circumvented, with manual complaint registration being the norm
State profilesInvestment Friendliness Index 106 111
Jharkhand
Area: 79,716 sq km
GSDP per capita: Rs 86,416
Agriculture share of GVA (FY23): 5.3%
Industry share of GVA (FY23): 44.7%
Services share of GVA (FY23): 50.0%
FDI inflow (FY24): $0.06mn
Key industries: Basic metals, coke and refined
petroleum products
Key enable rs •Abundance of resources
•Sound financial health
Data score (65) Survey score (35)
Areas needing improvement
• Business climate
Key performance indicators
• High coal and lignite production
• Low interest burden
Indicators for improvement
• FDI inflows
Overall
Rank
Score
Category
rank25/36
41.3
L | 16/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
22.6 18.7
State profilesInvestment Friendliness Index 112 109
Jharkhand attains an overall score of 41.3, ranking 16th among large states and 25
th
overall. Strengths include an abundance of natural resources, particularly in coal and
lignite production with opportunities for improvement in the business climate pillar,
especially in terms of attracting FDI.
Key factors driving the State score
Voices from the ground
Areas of strength
•
• Mobile network coverage remains inadequate
in suburban and rural areas of Jharkhand, with
BSNL being the only reliable service provider
in many of these locations, highlighting a
significant gap in telecom infrastructure
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
36%
26%
54%
63%
81%
68%
39%
22%
Best statePillar average
•Jharkhand performs well in the resources
and financial health pillars, while its scores
in the business climate and regulatory pillars
present areas for improvement
•In the resources pillar, the score is driven by
the State accounting for 18.4% of total coaland lignite production in India as of fiscal2024, ranking third, while also contributing5% of national metallic mineral productionby value in the period, ranking 5th across allstates and UTs
•In the financial health pillar, the State
maintains contained interest payments at2.4% of GSDP (below the category average of3.1%) and a gross fiscal deficit at 4% of GSDP(1.7% lower than the category average butabove the 15th Financial Commission limit),reflecting prudent fiscal management
•FDI equity inflow has been low in Jharkhand,
which is ranked 14th among 17 states on thisparameter in the large state category
The intracity roadways managed by the Tata Group ease are well-maintained, whereas those maintained by the National Highways Authority of India and Jharkhand government need improvement
State profilesInvestment Friendliness Index 108 113
Karnataka
Area: 1,91,791 sq km
GSDP per capita: Rs 2,39,394
Agriculture share of GVA (FY23): 6.3%
Industry share of GVA (FY23): 24.8%
Services share of GVA (FY23): 68.9%
FDI inflow (FY24): $6,571 mn
Key industries: Basic metals, food processing,
coke and refined petroleum products
Key enable rs •Sound financial health
•Supportive business climate
Data score (65) Survey score (35)
Areas needing improvement
•Regulatory ease
Key performance indicators
• Low interest burden
• Strong PE and VC inflows
Indicators for improvement
• Land allotment process
Overall
Rank
Score
Category
rank9/36
48.7
L | 7/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
29.8 18.9
114
Investment Friendliness Index State profilesInvestment Friendliness Index
114 111
Karnataka has an overall score of 48.7, ranking 7th out of 17 states in the large state (L)
category and 9th out of 36 overall. Karnataka’s score is driven by its strong performance in the
business climate pillar, driven by strong PE/VC inflows consistent with it being the home to
India’s Silicon Valley. Its score is dragged down by its below-average score in regulatory ease
and institutional environment.
Key factors driving the State score
•Karnataka shows strong performance in business and has sound financial health. However, institutional environment andregulatory ease pillars weigh on its overall score.
State’s relative performance across pillars
Note: Pillar average and best state metrics are evaluated at a pan-India level
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
45%
35%
52%
58%
80%
74%
41%
47%
Best statePillar average
•Karnataka’s strong performance in the
business climate pillar cements its position as
a dynamic and innovation-driven
economy. The State shows solid economic
performance, with a five-year CAGR of 6.1%,
compared with India’s ~4.8%and a GSDP per
capita of ~Rs 240,000, ranking 7th among
states. Karnataka has substantial export
volume as a percentage of GSDP, with its export
base totalling $30,481 million (fiscal 2025),
accounting for 6% of India’s export for the fiscal.
The state ranks fourth among large states in
terms of total export value.
•The robust performance in the business climate
pillar is attributed to strong PE/VC investments, as
Karnataka is home to India’s Silicon Valley, with
investments of Rs 1.29 lakh crore, accounting for
~22% of total PE/VC investments in India for 2024.
This further solidifies its status as one of the
country’s foremost innovation and startup hubs.
The State’s vibrant entrepreneurial
•The innovation ecosystem is driven by a robust
network of 798 ATLs across the State, ranking
4th among all states and UTs, and hence the
climate State continues to attract technology-
driven enterprises and startups. Additionally,
Karnataka’s business facilitation environment is
reflected in its strong FDI inflows, amounting to
$6,571 million (almost three times the
average value of $2,217 million for large states
as of fiscal 2024), and an impressive MoU
conversion rate of 99.93% for calendar 2022—
establishing a strong foundation for continued
investment and enterprise growth.
Key factors driving the State score
• Karnataka shows strong performance in business
and has sound financial health. However,
institutional environment andregulatory ease
pillars weigh on its overall score.
• Karnataka’s strong performance in the business climate pillar cements its position as a dynamic and innovation-driven economy. The State shows solid economic performance, with a five-year CAGR of 6.1%, compared with India’s ~4.8%and a GSDP per capita of ~Rs 240,000, ranking 7th among states. Karnataka has substantial export volume as a percentage of GSDP, with its export base totalling $30,481 million (fiscal 2025), accounting for 7.8% of India’s export for the fiscal. The state ranks fourth among large states in terms of total export value.
• The innovation ecosystem is driven by a robust network of 798 ATLs across the State, ranking 4th
among all states and UTs, and hence the climate State continues to attract technologydriven enterprises and startups. Additionally, Karnataka’s business facilitation environment is reflected in its strong FDI inflows, amounting to $6,571 million (almost three times the average value of $2,217 million for large states as of fiscal 2024), and an impressive MoU conversion rate of 99.93% for calendar 2022— establishing a strong foundation for continued investment and enterprise growth.
• The robust performance in the business climate pillar is attributed to strong PE/VC investments, as Karnataka is home to India’s Silicon Valley, with investments of Rs 1.29 lakh crore, accounting for ~22% of total PE/VC investments in India for 2024. This further solidifies its status as one of the country’s foremost innovation and startup hubs. The State’s vibrant entrepreneurial
State profiles
115
• ecosystem, supported by technology clusters,
skilled talent and enabling policy framework
has made it a preferred destination for investors
seeking high-growth opportunities.
• The State’s sound financial health is due to its well-managed debt, interest and fiscal deficit. Karnataka sustains a low interest burden, with interest payments constituting 2.33% of its GSDP (fiscal 2024), which is lower than that of 25 other states. Further, Karnataka’s gross fiscal deficit was at 4.5% of GSDP as of fiscal 2024, still higher than the target laid out by the 15th Finance Commission, and its total outstanding liabilities at 26.5% of its GSDP, comfortably lower than the large states’ average of 30.3%. This reflects sound fiscal management and disciplined borrowing practices. The State’s ability to contain interest obligations allows greater flexibility in allocating resources toward developmental priorities, strengthening its overall financial position and long-term fiscal sustainability.
• On the regulatory front, investors identified scope for improvement in construction permits, land allotment and use, ease of contract enforcement and access to commercial courts, and business closure. Karnataka, despite being one of India’s leading investment destinations, faces low regulatory ease that could hinder smoother business operations and faster project implementation. There is scope to streamline land allotment and land-use change approvals and to implement time-bound clearances, enabling smoother industrial expansion and new investments.
• Enhancing the efficiency of construction and environmental clearances should support timely execution of large and infrastructure-heavy projects. Complementary improvements in contract enforcement and access to commercial courts can further bolster investor confidence.
• Investors also highlighted the need for improvement in grievance-redressal mechanisms. Where grievance resolution is still evolving toward end-to-end visibility and time-bound closure, projects may experience schedule variability, additional coordination effort, and extended working-capital cycles, which can moderate momentum and investor onboarding.
Key factors driving the State score
Areas of strength
• The State has consistently implemented policies that support industries, giving investors the confidence to invest long-term
• The stability of these policies allows investors to plan investments for 10-15 years, ensuring a secure and predictable business environment
• The transparency in the land allotment process within the Karnataka Industrial Areas Development Board (KIADB) zones has improved significantly, enabling investors to plan expansions with greater confidence
• The government’s clear zoning policies have reduced ambiguity in land usage for manufacturing and warehousing, making it easier to operate
• Karnataka has a track record of stable labour relations, providing a favourable environment for our businesses to thrive
• Karnataka’s digital infrastructure, including the rollout of 5G and fibre connectivity, is strengthening its position as a leader in the IT sector
• The State’s focus on digital infrastructure is expected to further enhance its IT dominance, making it an attractive destination for businesses and investments
Areas of focus
• Bengaluru’s traffic situation, while challenging, can be addressed through targeted infrastructure development and traffic management strategies to improve the overall quality of life and business operations. There is a need for speedy development of the Peripheral Ring Road (PRR) and Metro connectivity to the airport. They have also suggested that the sub-urban rail project, which has not taken off, should be prioritised to reduce traffic on roads and improve overall connectivity
State profilesInvestment Friendliness Index 116 113
• Despite having strong airports, air cargo
handling can be beefed up reducing existing
delays for exporters and improving the growth of
international trade
• Enhancing the city’s infrastructure can also positively impact the perception of global companies and visitors, potentially attracting more investment and talent to the region
• Encouraging the development of industrial parks across various cities in Karnataka can promote regional growth and balance, rather than concentrating development in a single city
• Expanding the availability of plug-and- play facilities beyond select regions can support business growth and development
across the State
• The single window clearance system, although a positive step, can be optimised to reduce processing times, which currently average
at 30 days
• Land acquisition and permits: The companies have suggested that the process of acquiring land and necessary permits can be streamlined to reduce delays and costs associated with repeated requests and prohibitive fees
• The average time to get subsidies from application to disbursement is eight to 10 months, which can be optimised to provide timely support to businesses
State profilesInvestment Friendliness Index 112 117
Kerala
Area: 38,852 sq km
GSDP per capita: Rs 1,90,059
Agriculture share of GVA (FY23): 4.6%
Industry share of GVA (FY23): 28.3%
Services share of GVA (FY23): 6 7.1%
FDI inflow (FY24): $196 mn
Key industries: Coke and refined petroleum products,
food processing, rubber and plastics products
Key enable rs •Good infrastructure
•Environment resilience
Data score (65) Survey score (35)
Areas needing improvement
•Resources
Key performance indicators
• Large share of renewables
• Low seismic risk
Indicators for improvement
• Total outstanding liabilities
Overall
Rank
Score
Category
rank17/36
46.6
L | 12/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
23.8 22.8
118
Investment Friendliness Index State profilesInvestment Friendliness Index
118 115
Kerala has an overall score of 46.6, ranking 12th in the large state category and 17th overall.
Kerala’s score is driven by its performance in infrastructure, driven by the 2nd highest share
of renewables among all 36 states and UTs and environment resilience pillars, with room for
improvement in business climate and resources.
Key factors driving the State score
•Kerala’s 12th rank among large states is driven by its performance in the infrastructure and environment resilience pillars, with room for improvement in business climate and financial health
•Kerala’s score in the infrastructure pillar is driven by its second highest share of renewables in power generation capacity, low
transmission and distribution (T&D) losses of 14% compared with an average of 18.2% for
large states and a stable electricity supply of
23 hours a day compared with the large
states’ average of 22.7 hours
•Kerala has a favourable environment resilience among states, supported by a good air quality index (AQI) in cities such as Kochi,
Kollam and Kozhikode that maintain satisfactory-to-good AQI levels (51–100 and 0–50, respectively) for most days throughout the year, ensuring a healthy urban environment. Additionally, the
absence of any area in earthquake zones V
or IV reduces the State’s exposure to
seismic risks, enhancing its overall safety and investment appeal
•Kerala can further strengthen its business climate by increasing capex, which was at
6% of GSDP as of fiscal 2024. This would support infrastructure and economic growth. Supporting and enhancing the innovation ecosystem would aid in improving the number of patent applications that was 1% of the total number of companies registered in fiscal 2023,
compared with the large states’ average of
3.6%. Additionally, attracting higher FDI inflows
compared with fiscal 2024 levels of $197 million (0.4% of India’s FDI) would help boost investment and diversify Kerala’s economic landscape
•The resource pillar shows scope for improvement. Improving the labour force participation rate, which stood at 41% as of 2024 (lower than the pan-India average of 47%), can unlock greater economic potential and inclusivity
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
37%
26%
66%
66%
54%
78%
50%
31%
Best statePillar average
Key factors driving the State score
• Kerala’s 12th rank among large states is driven
by its performance in the infrastructure and
environment resilience pillars, with room for
improvement in business climate and financial
health
• Kerala’s score in the infrastructure pillar is driven by its second highest share of renewables in power generation capacity, low transmission and distribution (T&D) losses of 14% compared with an average of 18.2% for large states and a stable electricity supply of 23 hours a day compared with the large states’ average of 22.7 hours
• Kerala has a favourable environment resilience among states, supported by a good air quality index (AQI) in cities such as Kochi, Kollam and Kozhikode that maintain satisfactory-to-good AQI levels (51–100 and 0–50, respectively) for most days throughout the year, ensuring a healthy urban environment. Additionally, the absence of any area in earthquake zones V or IV
reduces the State’s exposure to seismic risks, enhancing its overall safety and investment appeal
• Kerala can further strengthen its business climate by increasing capex, which was at 6% of GSDP as of fiscal 2024. This would support infrastructure and economic growth. Supporting and enhancing the innovation ecosystem would aid in improving the number of patent applications that was 1% of the total number of companies registered in fiscal 2023, compared with the large states’ average of 3.6%. Additionally, attracting higher FDI inflows compared with fiscal 2024 levels of $197 million (0.4% of India’s FDI) would help boost investment and diversify Kerala’s economic landscape
• The resource pillar shows scope for improvement Improving the labour force participation rate, which stood at 41% as of 2024 (lower than the pan-India average of 47%), can unlock greater economic potential and inclusivity
State profilesInvestment Friendliness Index 114 119
Voices from the ground
Areas of strength
• Kerala’s roads are clean with good connectivity,
and the wide roads make transportation easy
• The closure procedure for business is relatively easy to complete, with no hidden charges applicable at the time of exit
• The single window system is fast and transparent and is less time-consuming with a highly responsive system, providing good overall user experience
• The available digital infrastructure and IT parks are good
• The State has four international airports that cater to the requirements of the people, with the State-promoted CIAL being exemplary in several traits, including low carbon emissions
Areas of focus
• Labour strikes have an impact on the operational stability and goodwill of business operations
• The availability of storage facilities is limited, which can affect the State’s agricultural sector, particularly for perishable goods like spices and fruits. In the food processing industry, the lack of
proper storage facilities results in a significant amount of fruit decay, with ~40% of the State’s fruit production being affected
•There is a need for cold warehouses to store the
State’s agricultural produce and processed/
semi-processed foods, as well as addressing
logistic constraints
•Underutilised facilities owned by the State or
Central public sector enterprises (PSEs) could
be retrofitted or revamped to supplement the
storage requirements
•The State faces a brain drain, with many skilled
workers migrating to other regions such as Dubai
or other Gulf countries, or to larger Indian cities
like Mumbai
•While plug-and-play facilities are available for IT
start-ups, the infrastructure for other industries
is less developed
•There is a need to establish a hassle-free
environment for starting new initiatives,
with
improved interdepartmental coordination and a
more supportive ecosystem for entrepreneurs
•The success of existing ventures and the
effectiveness of efforts to attract new
investments are closely linked, and addressing
the challenges
faced by existing businesses is
crucial to attracting new investors
State profilesInvestment Friendliness Index 120 117
Ladakh
Area: 59,146 sq km
GSDP per capita: Not available
*
Agriculture share of GVA (FY23): Not available
*
Industry share of GVA (FY23): Not available
*
Services share of GVA (FY23): Not available
*
FDI inflow (FY24): Not available
*
Key industries: Not available
*
Key enable rs
• Resources
Data score (65) Survey score (35)
Areas needing improvement
• Infrastructure
Key performance indicators
• Female workforce participation rate
Indicators for improvement
• Road density
Overall
Rank
Score
Category
rank35/36
27
N | 12/12
State category
L – Large state
C – City state
N – Northeastern/hilly state
1 7.7 9.3
* Not available” indicates nonavailability of published data
State profilesInvestment Friendliness Index 116 121
Ladakh has an overall score of 27, ranking 12th among the northeastern and hilly states and
35th overall. Its strengths include human resources, such as the percentage of students
enrolled in STEM fields and female workforce participation. However, there are significant
opportunities for improvement within the infrastructure pillar, particularly in road development.
Key factors driving the State score
• Ladakh is an emerging state, aided by its
performance in human resources; however, it has
significant scope to improve in the infrastructure
pillar, which is essential for supporting its growth
and development
• Ladakh boasts a female workforce participation rate of 47% in 2024, surpassing the pan-India average of 40%
• In the business climate pillar, Ladakh performs well with respect to the number of functioning commercial bank offices per capita and ranks first in this metric among hilly and northeastern states. It ranks fourth across all states and UTs in the number of startups relative to the number of active companies, reflecting a positive entrepreneurial environment and financial inclusion
• Within the infrastructure pillar, Ladakh ranks 35th in road density. Despite accounting for 2% of India’s land area, its contribution to the total
road network is just 0.12%, signifying an area of improvement, given its geopolitical standing. Additionally, the region ranks 30th in area available for industrial allotment, indicating key opportunities for enhancing connectivity and industrial development
Voices from the ground
Areas of strength
• Labour availability is not a concern, as Ladakh attracts a significant number of migrant workers from other states who are willing to work for competitive wages
Areas of focus
• Road infrastructure can be strengthened further to improve overall connectivity. Enhancing the quality and reach of road networks should support smoother logistics movement and improve accessibility
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional
environment
Financial health
Environment resilience
27%
8%
27%
39%
28%
44%
27%
28%
Best statePillar average
State profilesInvestment Friendliness Index 122 119
Lakshadweep
Area: 32 sq km
GSDP per capita: Not availabl
e
*
Agriculture share of GVA (FY23): Not available
*
Industry share of GVA (FY23): Not available
*
Services share of GVA (FY23):
Not available
*
FDI in
flow (FY24): Not available
*
Key industries: Not available
*
Key enable rs
• Supportive business climate
Data score (65) Survey score (35)
Areas needing improvement
• Infrastructure
Key performance indicators
•Commercial bank branches per capita
Indicators for improvement
• Share of renewables in power
generation
Overall
Rank
Score
Category
rank36/36
24.5
C | 7/7
State category
L – Large state
C – City state
N – Northeastern/hilly state
16 8.5
* Not available” indicates nonavailability of published data
State profilesInvestment Friendliness Index 118 123
With an overall score of 24.5, Lakshadweep ranks seventh among City States/Union
Territories and 36th overall. The islands are known for their peaceful culture and quality of
life. However, there is scope for improvement within the infrastructure pillar.
Key factors driving the State score
• Lakshadweep demonstrates a satisfactory
performance in the business climate pillar;
however, there is scope for improvement in the
infrastructure pillar
• The business climate pillar is supported by a 24% higher-than-category average of functioning offices of scheduled commercial banks per lakh population
• It is a tourism-focused island with a low crime rate, reporting state-wise crime incidents at 6 per lakh population, significantly below the average of 16 across states
• The State-wise count of 4G and 5G BTS increased to 50 in fiscal 2025 from 15 in fiscal 2023, reflecting improved mobile network coverage and connectivity for residents and visitors, which is crucial for communication and accessing digital services
• The share of renewable energy in power generation is lower than that of four out of the six other city-states
Voices from the ground
Areas of strength
• People in Lakshadweep enjoy a good quality of life, characterised by the peaceful and serene environment in the islands
• The disaster management systems in Lakshadweep are satisfactory
Areas of focus
• One of the significant challenges encountered is the frequent refusal from domestic port authorities when seeking space for loading barges. Often, these requests are denied on the grounds that permission is required from Kavaratti and the barge authorities, leading to delays and operational inefficiencies
• There is a pressing need for the implementation of 5G facilities at Kalpeni
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional
environment
Financial health
Environment resilience
25%
8%
24%
37%
25%
36%
25%
25%
Best statePillar average
State profilesInvestment Friendliness Index 124 121
Madhya Pradesh
Area: 308,252 sq km
GSDP per capita: Rs 92,477
Agriculture share of GVA (FY23): 25.4%
Industry share of GVA (FY23): 26.4%
Services share of GVA (FY23): 48.2%
FDI inflow (FY24): $23.59 mn
Key industries: Food products, coke and refined
petroleum products
Key enable rs
•Abundance of resources
•Government policy
Data score (65) Survey score (35)
Areas needing improvement
• Business climate
Key performance indicators
• High share in mineral production
• Consistency in state policies
Indicators for improvement
• Number of commercial bank
branches per capita
Overall
Rank
Score
Category
rank7/36
48.9
L | 5/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
26.3 22.6
State profiles
11 125
State profilesInvestment Friendliness Index
120 125
Madhya Pradesh has an overall score of 48.9, ranking fifth in the large-state category and
seventh overall. Located in the heart of India, Madhya Pradesh serves as a strategic link
between the northern and southern regions of the country. It has made notable progress in
industrial development and infrastructure creation, positioning itself as an emerging
destination for investment. The State's score is driven by strong performance in the
resources and government policy pillars, with business climate being an area of improvement.
Key factors driving the State score
•Madhya Pradesh benefits from a strong foundation of natural and human resources, which has been a key enabler of its economic growth. The State is rich in minerals such as coal, limestone and manganese, providing a critical raw-material base for industries such as cement, steel and energy
•Madhya Pradesh’s contribution to India’s overall mineral output highlights its importance as a mining hub as it accounts for 15.6% of the production of non-metallic minerals in India, ranking second in the country in 2024
•On human resources, the State has been focusing on skill development and technical training to expand its industrial workforce. In 2023, the State added 12,819 new technical workers, compared with an average of around 4,000 across states. This combination of natural-resource availability and an improving talent base positions Madhya Pradesh well for sustained investment and industrial activity
•Madhya Pradesh has demonstrated a favourable institutional environment by prioritising administrative efficiency,
maintaining law and order, and facilitating smooth business operations. The State’s governance framework is marked by relatively low labour disruptions and positive perception scores regarding effective grievance redressal mechanisms
•Madhya Pradesh scored 6 points higher than the category average on perception around consistency in state policies, which is critical for attracting long-term investments
•The number of startups increased to 1,264 in fiscal 2023 from 540 in 2021. However, the count
of incubators per lakh population was 53% lower than the average across large states in fiscal
2023. Additionally, the relatively low number of patent applications filed per enterprise (~48% lower than the average across large states) suggests the State’s innovation ecosystem is still in the development phase and could be improved with focused interventions
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
51%
54%
66%
71%
57%
73%
42%
28%
Best statePillar average
Key factors driving the State score
• Madhya Pradesh benefits from a strong
foundation of natural and human resources,
which has been a key enabler of its economic
growth. The State is rich in minerals such as
coal, limestone and manganese, providing a
critical raw-material base for industries such as
cement, steel and energy
• Madhya Pradesh’s contribution to India’s overall mineral output highlights its importance as a mining hub as it accounts for 15.6% of the production of non-metallic minerals in India, ranking second in the country in 2024
• On human resources, the State has been focusing on skill development and technical training to expand its industrial workforce. In 2023, the State added 12,819 new technical workers, compared with an average of around 4,000 across states. This combination of natural-resource availability and an improving talent base positions Madhya Pradesh well for sustained investment and industrial activity
•
• Madhya Pradesh has demonstrated a favourable institutional environment by prioritising administrative efficiency, maintaining law and order, and facilitating smooth business operations. The State’s governance framework is marked by relatively low labour disruptions and positive perception scores regarding effective grievance redressal mechanisms
• Madhya Pradesh scored 6 points higher than the category average on perception around consistency in state policies, which is critical for attracting long-term investments
• The number of startups increased to 1,264 in fiscal 2023 from 540 in 2021. However, the count of incubators per lakh population was 53% lower than the average across large states in fiscal 2023. Additionally, the relatively low number of patent applications filed per enterprise (~48% lower than the average across large states) suggests the State’s innovation ecosystem is still in the development phase and could be improved with focused interventions
State profilesInvestment Friendliness Index 126 123
• Madhya Pradesh has 11 commercial bank
branches per population, compared with the
average of 19 across states in 2024. This has
implications for financial inclusion and access
to credit, which are essential components of a
robust business environment
Voices from the ground
Areas of strength
• Promotion agencies in Madhya Pradesh are responsive to inquiries and provide accurate information proactively, which enhances the overall experience of businesses
• The single-window system in the State is characterised by its speed, effectiveness and transparency, resulting in a positive user experience for entrepreneurs
• The Government of Madhya Pradesh has implemented a commendable policy of allocating industrial land to actual users, ensuring that land is either utilised for industry setup or surrendered. This policy emphasises that industrial land should be non-transferable
Areas of focus
• There is an opportunity to enhance the industrial park facilities in Bhopal to better support businesses and attract investment
• The condition of roads in the region requires attention, as many are poorly maintained and lack proper drainage planning. This oversight leads to early erosion of the road surfaces. Additionally, uncoordinated repairs for plumbing, electrical and fibre optic lines are frequently conducted shortly after road repairs, resulting in a lack of synchronisation
• Improved airport infrastructure is necessary, with good connectivity to project locations. Establishing airports every 100-150 kilometres would facilitate faster access to these areas. Currently, many states face challenges with airport infrastructure and connecting flights
• The law and order situation in Madhya Pradesh is average, with a notable concern regarding the police force’s adequacy. The State has approximately 138 police officers per 100,000 people, which falls below the national average of 194. Addressing this issue could contribute to improved law and order in the State
State profilesInvestment Friendliness Index 122 127
Maharashtra
Area: 3,07,713 sq km
GSDP per capita: Rs 2,16,710
Agriculture share of GVA (FY23): 6.7%
Industry share of GVA (FY23): 30.0%
Services share of GVA (FY23): 63.3%
FDI inflow (FY24): $15,116 mn
Key industries: Automobile, chemicals, machinery
and equipment
Key enable rs •Sound financial health
•Supportive business climate
Data score (65) Survey score (35)
Areas needing improvement
•Regulatory ease
Key performance indicators
• Low outstanding liabilities as a
percentage of GSDP
• Strong PE and VC inflows
Indicators for improvement
• Number of cyber crimes
Overall
Rank
Score
Category
rank2/36
53.7
L | 2/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
32.0 21.7
State profilesInvestment Friendliness Index 128 125
Maharashtra has an overall score of 53.7, ranking second in both the large-state (L) category and
at the pan-India level. The State’s score is driven by its leading performance in the business
climate pillar, driven by it being ranked the highest for attracting PE/VC share of investments and
in the number of ATLs. Its score is also supported by its
strong performance in the resources and
financial health pillars,
with the infrastructure and regulatory ease being an area of
improvement.
Key factors driving the State score
•Maharashtra is the top performer under the
business climate pillar and ranks among thetop five for resources and financial health
pillars. However , infrastructure and low
regulatory ease weighs down its overall score
•The business climate
score is driven by the
State attracting the highest share of PE/VC investments (35% of the investments in the
country), while also having the
highest number
of A
TLs at 1,033, accounting for 10% of the total
ATLs in India. Maharashtra’s performance in the
business climate pillar is driven by its economic
indicators, featuring a GSDP per capita
of Rs
216,710, which ranks 11th among 36 states
and UTs
•It
is among the top five states in resources as it
has the
highest budget among states for skilling,
while also ranking second in terms of renewable resource potential
•It ranks among the top five in the financial
health pillar due to its lowest fiscal deficit
as a percentage of GSDP among the large
states (3.94% in 2024)
•There is a need for
improvement in airport
capacity relative to the population, as well as in the airport’s cargo
capacity, which currently
stands at 55,200 MT, ranking 13th among all
states. Additionally, the number of international
airports (three)
can be improved when considered
in relation to the size of the State
•The industrial power cost in Maharashtra is ~10.4% higher than the average of all other states and UTs
•Ease of exit, contract enforcement, access
to dedicated commercial
courts and disaster
preparedness
are other areas of focus for
Maharashtra
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
54%
38%
61%
64%
90%
72%
46%
47%
Best statePillar average
State profilesInvestment Friendliness Index 124 129
Voices from the ground
Areas of strength
• The State’s railway network provides excellent
connectivity for cargo, linking major industrial
hubs to ports and facilitating the efficient
transportation of goods
• Maharashtra’s well-developed industrial parks, equipped with good utilities and easy access to transport hubs, make it relatively easy for businesses to set up and operate quickly
• The State boasts strong storage infrastructure, with well-established warehousing and logistics hubs, particularly near ports and industrial corridors, supporting the growth of industries
• Maharashtra’s extensive higher education network, industrial hubs and presence of reputed technical institutes contribute to a strong talent pool, providing businesses with access to skilled and qualified personnel
• The State has demonstrated strong capabilities in workforce availability for wind and solar energy project deployment, construction and operations, with technical institutes focused on clean energy, making it an attractive location for companies in the renewable energy sector
• Maharashtra offers a good quality of life, with a diverse range of cultural and recreational options, making it an attractive destination for businesses and their employees
Areas of focus
• The construction permit process, although facilitated by systems such as AutoDCR, can be
complex and time-consuming due to the need for numerous approvals from various departments, which may hinder timely project execution
• While Maharashtra has a functional single- window system, occasional delays and less streamlined processes can be improved to provide a more efficient experience for businesses
• The quality of roads, particularly in urban areas such as Mumbai, can be improved through investments in maintenance and upgrades, which would aid connectivity and transportation
• Although Maharashtra has good airports in major urban centres, there is a need to enhance connectivity and expand airport infrastructure in smaller cities and towns to support regional economic development
• The development of new seaports and improvement of existing ones can enhance good transportation and support the growth of industries
• The lack of train routes between important industrial cities such as Nashik and Pune can be addressed to improve connectivity and facilitate the transportation of goods
• Maharashtra’s industrial power rates are among the highest in the country, which can be a disincentive for businesses, particularly when compared with other states
• Maharashtra experiences more frequent policy shifts and inconsistent enforcement, which can cause uncertainties and challenges for businesses
130Investment Friendliness Index
Manipur
Area: 22,327 sq km
GSDP per capita: Rs 85,414
Agriculture share of GVA (FY23): 11.8%
Industry share of GVA (FY23): 11.2%
Services share of GVA (FY23): 77.0%
FDI inflow (FY24): Not available*
Key industries: Non-metallic mineral products,
food processing
Key enablers
• Abundance of resources
Data score (65) Survey score (35)
Areas needing improvement
• Financial health
• Government policy
Key performance indicators
• Adequate vocational training
capacity
Indicators for improvement
• Exports as a percentage of GSDP
Overall
rank
Score
Category
rank33/36
32.3
N | 11/12
State category
L – Large state
C – City state
N – Northeastern/hilly state
18.4 13.9
* Not available” indicates nonavailability of published data
State profiles 131
Manipur has an overall score of 32.3, ranking 11th among northeastern and hilly states and
33rd overall. This score is driven by its performance in the resources pillar. However, there are
significant areas for improvement in the government policy and financial health.
State’s relative performance across pillars
Key factors driving the state’s score
• Manipur demonstrates strong performance
in the resources pillar. However, it displays below-average performance across multiple pillars, highlighting opportunities for targeted enhancements to bolster investor confidence and economic resilience
• In human resources, the state performs well in
terms of number of people entering the workforce as a percentage of population (graduates plus post-graduates)—22% above the category average. Its vocational training capacity was 31% above the category average in 2025 through ITIs and skill programmes, supporting a growing talent pool
• With respect to infrastructure, Manipur
performed well in road density (~37% above the pillar average for fiscal 2024). Average availability of power supply was 22.7 hours a day for fiscal 2024 (the average of hilly and northeastern states was 21.9 hours)
• Manipur also performed well in investor
satisfaction with a single window policy, with the perception score being 6 points above the category average
• There are areas for improvement in the
government policy and financial health pillars. The state’s gross fiscal deficit stood at ~11.3% of GSDP in fiscal 2024, ~4% above the category average and ~7% above the limit set by the 15th Finance Commission
39%
9%
40%
54%
38%
50%
31%
23%
Best statePillar average
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
132Investment Friendliness Index
• Low R&D incentives disbursed relative to state
GVA and limited incentive allocations in the
state budget contributed to a subdued score in
the government policy pillar, indicating potential
for expanded support in innovation and industry
promotion
• There is a need to strengthen the business
climate pillar, as the state lags in certain aspects, such as exports
Voices from the ground
• Road infrastructure can be strengthened further to improve overall connectivity. Enhancing the quality and reach of road networks would support smoother logistics movement and improve accessibility for industries and local communities across the state
• Sociopolitical stability can be improved to create a more predictable environment for long-
term investments. Greater consistency and stability in the sociopolitical landscape would help reinforce investor confidence and support sustained economic development
• Additional flight connectivity across the northeast, along with new international routes, would boost economic activity. Expanding domestic connectivity and opening international flights to neighbouring countries such as Bangladesh, Myanmar and Thailand would enhance trade opportunities and significantly support sectors such as medical tourism and cross-border commerce
• Power supply reliability can be improved by reducing load shedding. Minimising load shedding and strengthening the power distribution system would ensure more consistent electricity availability, benefiting industries and households alike
State profiles 133
Meghalaya
Area: 22,429 sq km
GSDP per capita: Rs 95,525
Agriculture share of GVA (FY23): 9.0%
Industry share of GVA (FY23): 20.6%
Services share of GVA (FY23): 70.4%
FDI inflow (FY24): Not available*
Key industries: Non-metallic mineral
products, basic metals
Key enable rs
• High regulatory ease
• Favourable institutional environment
Data score (65) Survey score (35)
Areas needing improvement
• Business climate
• Government policy
Key performance indicators
• Ease of obtaining construction permits
• Perceived consistency in state policies
Indicators for improvement
• FDI inflows
Overall
rank
Score
Category
rank23/36
43
N | 5/12
State category
L – Large state
C – City state
N – Northeastern/hilly state
19.5 23.5
* Not available” indicates nonavailability of published data
134Investment Friendliness Index
Meghalaya has an overall score of 43, ranking fifth among northeastern and hilly states and
23rd overall. This score is driven by significant regulatory ease and a favourable institutional
environment. However, there are significant areas for improvement in the business climate and
government policy pillars.
Key factors driving the state’s score
• Meghalaya’s score is driven by its performance in the institutional environment and regulatory ease pillars. However, there are areas of improvement in the business climate and government policy pillars
• Meghalaya performs strongly in the environment resilience pillar, as no cities fall within Seismic Zones IV or V, and the state has a relatively low exposure to cyclones
• The state maintains moderate air quality, with a weighted average AQI of ~85 (better than the national urban average of more than 100 in 2024)
• The institutional environment pillar is strengthened by a low overall crime rate and low incidence of economic offences (forgery, cheating and fraud) at ~13 cases per lakh population in 2023 (below the national average of 16)
• High investor satisfaction was reported on single-window clearances, environmental approvals, construction permits, and utility connections (electricity and water), supported by the Meghalaya Industrial and Investment Promotion Policy 2024
• The business climate is affected by a low GSDP growth rate of ~3.6% over the last five years, compared with the average of 4.8% across states
• Additionally, the number of active commercial bank branches per lakh population at 13 was below the category average of 19 in fiscal 2024. Exports have remained modest, ranging between $9 million and $11 million annually from fiscal 2021 to fiscal 2024, driven by agricultural products. Meanwhile, FDI equity flow has remained minimal, even when compared with the category average of 0.63% of GSDP
• Airport infrastructure can be improved. Meghalaya lacks an airport with international operations
State’s relative performance across pillars
40%
22%
70%
73%
54%
86%
36%
25%
Best statePillar average
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
State profiles 135
Voices from the ground
Areas of strength
• The state offers strong highway and railway
connectivity, supporting efficient movement of
goods. Highway networks are well-developed,
and railway schedules, along with cargo-
handling capacity function effectively. Together,
they provide reliable multimodal transport
options for industries and help streamline
freight operations
• Power supply is consistent and reliable, with no
significant outages reported. Stable electricity availability supports uninterrupted business operations, particularly for industries requiring continuous production cycles
• Digital connectivity is strong, with good internet
speeds and wide mobile network coverage. This robust digital environment facilitates modern business operations, ensuring smoother communication, data transfer and technology- led processes
• Utility connections are easy to obtain,
contributing to smoother project initiation. Access to essential utilities such as electricity and water is manageable and timely, reducing delays during the setup phase for new and expanding units
• Key approval processes—such as construction
permits and land allotment—are transparent and predictable. Both the construction permit process and the land allotment framework operate with clear procedures, offering businesses greater certainty and improving ease of doing business
Areas of focus
• Road conditions in certain areas can be improved.
Enhancing internal road quality would support smoother transportation and strengthen last- mile connectivity for industries.
• Industrial park infrastructure offers scope
for further development. Upgrading facilities, utilities and internal infrastructure within industrial parks would enhance their effectiveness and better support tenant industries
• Logistics and supply-chain systems can
be strengthened. Improvements in storage, transportation links and handling facilities would help reduce operational bottlenecks and improve overall efficiency
• The single-window system can be made more
efficient. Streamlining processes, improving responsiveness and enhancing coordination across departments would further ease the approval experience for businesses
• State-level grievance redressal mechanisms
can be improved with additional reforms. More structured, timely and transparent mechanisms for addressing industry concerns would help create a smoother operational environment and strengthen investor confidence
136Investment Friendliness Index
Mizoram
Area: 21,081 sq km
GSDP per capita: Rs 202,980
Agriculture share of GVA (FY23): 5.1%
Industry share of GVA (FY23): 30.2%
Services share of GVA (FY23): 64.7%
FDI inflow (FY24): Not available*
Key industries: Food processing, textiles
Key enablers
• Favourable institutional environment
• Sound financial health
Data score (65) Survey score (35)
Areas needing improvement
• Government policy
• Business climate
Key performance indicators
• Low cyber crime rate
• Controlled fiscal deficit
Indicators for improvement
• Power cost
Overall
rank
Score
Category
rank29/36
39.9
N | 8/12
State category
L – Large state
C – City state
N – Northeastern/hilly state
20.6 19.3
* Not available” indicates nonavailability of published data
State profiles 137
State’s relative performance across pillars
Key factors driving the state’s score
• Mizoram’s score is driven by its performance
in the institutional environment and financial
health pillars. However, there are areas for
improvement in the infrastructure pillar
• The state’s sound financial health is on account
of interest payments of ~2.9% of GSDP in fiscal 2024, compared with the peer average of 3.7%, and a gross fiscal deficit of 5.6% of GSDP, compared with the peer average of 7.1% but still higher than the range laid out by the 15th Finance Commission
• High perception scores in land allotment and
use (10 points above the category average) and permissions/NOCs to start a business (three points higher than the category average), which drove the score for the regulatory ease pillar, are
supported by streamlined processes under the Mizoram Industrial Policy
• In institutional environment, Mizoram performed
well in perception around consistency of state policies, scoring nine points higher than the category average, with positive feedback on environmental clearances and utility connections via single-window systems
• In terms of policyholder satisfaction with state
policies, Mizoram scored six points below the category average, which led to a low score in the government policy pillar—this is an area for improvement
• In the business climate pillar, investment
promotion agencies emerged as an area for improvement as investors rated satisfaction with Mizoram’s IPA at ~40% below the category average
31%
17%
60%
68%
65%
69%
35%
28%
Mizoram has an overall score of 39.9, ranking eighth among northeastern and hilly states
and 29th overall. This score is driven by sound financial health and effective institutional
performance. However, there are areas for improvement in the government policy and business
climate pillars.
Best statePillar average
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
138Investment Friendliness Index
• Infrastructure could be improved. Mizoram
has a low rail density and lacks an airport with
international operations. The state’s railway
routes have measured only 1 to 2 km over the
past five years, and the current airport, Lengpui,
only offers domestic flights
State profiles 139
Nagaland
Area: 16,579 sq km
GSDP per capita: Rs 107,960
Agriculture share of GVA (FY23): 13.2%
Industry share of GVA (FY23): 12%
Services share of GVA (FY23): 74.8%
FDI inflow (FY24): Not available*
Key industries: Wood and products of wood and
cork, food products
Key enable rs
• High regulatory ease
• Favourable institutional environment
Data score (65) Survey score (35)
Areas needing improvement
• Resources
• Infrastructure
Key performance indicators
• Simplified business approval process
• Low crime rate
Indicators for improvement
• New technical workforce added
Overall
rank
Score
Category
rank27/36
41.2
N | 6/12
State category
L – Large state
C – City state
N – Northeastern/hilly state
19.8 21.4
* Not available” indicates nonavailability of published data
140Investment Friendliness Index
Key factors driving the state’s score
• Nagaland’s score is driven by its strong
performance in the government policy,
regulatory ease and institutional environment
pillars, reflecting consistent reform efforts and
stable governance
• For Nagaland, the five-year GSDP growth rate between fiscals 2019 and 2024 was 4.84%, surpassing the national average of 4.8%. The state achieved a high score in capital expenditure (capex) incentive disbursement relative to total industrial capex, with 18%, compared with the national average of 11% and category average of 17%. This, in conjunction with a high female workforce participation rate (59% in fiscal 2024 compared with the category average of 13% and the national average of 40%), highlight the inclusive growth momentum
• The regulatory ease pillar benefits from strong perception scores in land allotment and use (nine points above the category average), environmental clearance (eight points above the category average), and ease of exit—average time to close a business (10 points above the category average)
• Areas for improvement include increasing airport capacity at Dimapur Airport (currently accommodates 0.5 million passengers per annum), enhancing cargo-handling capabilities and addressing low rail density (lower than six states in the same category)
• With regard to digital infrastructure indicators, 5G/4G penetration (BTS per sq km area) is 26% lower than that of other states in the same category, and per capita digital payment transactions are 0.5x the category average.
• These present opportunities for further enhancements to support a more connected business ecosystem
State’s relative performance across pillars
24%
47%
68%
76%
49%
67%
32%
27%
Nagaland has an overall score of 41.2, ranking sixth among northeastern and hilly states and 27th
overall. This score is driven by significant regulatory ease and strong institutional environment.
However, there are notable areas for improvement in the resources and infrastructure pillars,
particularly in the human resources aspect.
Best statePillar average
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
State profiles 141
Voices from the ground
Areas of strength:
• Road construction quality is strong, with regular
maintenance supporting reliable connectivity.
The state maintains its road network well,
ensuring smooth travel and dependable
movement of goods. Periodic maintenance helps
preserve road quality and supports efficient
logistics operations. Industrial power supply is
stable, with no major outages or interruptions
• The Investment Promotion Agency functions effectively, providing meaningful support to investors. The agency plays an active role in facilitating investments, offering guidance and assistance that help businesses navigate processes more smoothly
• Law and order conditions are strong, with a low crime rate, contributing to a secure business environment. A stable security environment enhances investor confidence and supports an atmosphere conducive to long-term industrial growth
• The state’s industrial policy and broader economic framework are transparent and supportive. Clear and predictable policies enable businesses to plan with confidence and
understand the regulatory landscape without ambiguity
• Key regulatory processes such as land allotment and construction permits are highly transparent. These procedures follow well-defined steps, helping investors secure land and approvals more easily and reducing uncertainty during project setup
Areas of focus:
• Availability of skilled workers can be enhanced through targeted skilling initiatives. Introducing more industry-relevant training programmes would help address workforce gaps and support growing sectors more effectively
• The single-window system can be strengthened for greater efficiency. Although the system is in place, businesses often still need to visit multiple offices. Streamlining workflows and improving digital integration would help make the process more seamless
• Water connection processes offer room for improvement. While electricity connections are smooth, obtaining water connections can be time-consuming. Faster and more predictable procedures would support quicker project initiation
142Investment Friendliness Index
Odisha
Area: 155,707 sq km
GSDP per capita: Rs 125,282
Agriculture share of GVA (FY23): 8.6%
Industry share of GVA (FY23): 50.8%
Services share of GVA (FY23): 40.6%
FDI inflow (FY24): $8.79 million
Key industries: Basic metals, coke and refined
petroleum products
Key enablers
• Sound financial health
• Abundance of resources
Data score (65) Survey score (35)
Areas needing improvement
• Regulatory ease
Key performance indicators
• Interest payments as percentage
of GSDP
• Metallic minerals production
Indicators for improvement
• Contract enforcement and access
to commercial courts
Overall
rank
Score
Category
rank5/36
52.4
L | 4/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
32.0 20.4
State profiles 143
State’s relative performance across pillars
Key factors driving the state’s score
• The state shows strong performance in the
resources and financial health pillars. Areas for
improvement are institutional environment and
regulatory ease
• The high score in resources is attributable
to Odisha ranking first in metallic mineral production and coal production, at 50% and 23%, respectively, of India’s production as of fiscal 2024
• Total outstanding liabilities at 16% of GSDP
and its interest payments at 1.38% of the state GSDP as of fiscal 2024—both the lowest among states—helped it secure the third position in the financial health pillar
• In terms of infrastructure, Odisha’s performance
in container freight station (CFS) and inland container depot (ICD) capacity, as well as warehousing capacity, indicate areas for improvement. The state’s warehousing capacity is 98,000 MT, below the average of 4.7 lakh MT across states
• Foreign direct investment (FDI) equity inflows
have remained stagnant over the years, dropping to $9 million in 2024, ~81% lower than the state’s average FDI inflow over the previous three years. Investors expressed a need for improvement in the single-window policy, time taken for environmental clearances and ease of ceasing business operations
55%
46%
58%
61%
92%
78%
46%
36%
Odisha has an overall score of 52.4, ranking fourth in the large-state (L) category and fifth over-
all. This score is driven by the state’s strong performance in resources, government policy and
financial health pillars due to its leading performance in metallic mineral and coal production,
with institutional environment and regulatory ease being the areas for improvement.
Best statePillar average
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
144Investment Friendliness Index
• Investors outlined the scope for improvement in
the ease of contract enforcement and access to
dedicated commercial courts as Odisha scored
six points lower than the category average
Voices from the ground
Areas of strength:• The process for initiating a business in Odisha
is streamlined and adheres to the established timeframe, contributing positively to the investment climate. The registration process with the Registrar of Companies (ROC) has been notably efficient, with no significant obstacles faced, which fosters a supportive environment for entrepreneurs
• The law and order situation in Odisha is
comparatively more favourable than in other states, enhancing the overall business environment and providing a sense of security for investors and stakeholders
Areas of focus:
• There is an opportunity to enhance mobile
network coverage in Odisha’s suburban and rural regions, where Bharat Sanchar Nigam Ltd currently serves as the primary service provider. Improving connectivity in these areas could significantly benefit local businesses and residents
• The state’s industrial landscape could be
enriched by introducing a more diverse array of industrial parks and establishing competitive land pricing. This diversification would attract a broader range of industries and support economic growth
• The availability of industrial park facilities in
Bhubaneswar is limited and relatively costly, which may present challenges for startups. There is a strong opportunity for improved basic infrastructure and more affordable options to foster a supportive environment for emerging businesses
• North Odisha, particularly around Bhadrak,
faces several critical challenges that impact industrial and trade activities. One issue is the limited rail connectivity, with only one daily train service and certain areas lacking direct rail networks. Additionally, the road infrastructure is underdeveloped, which can create bottlenecks in the movement of goods
• The absence of a commercial airport in
Bhadrak complicates both passenger and cargo movement for industries across several districts, including those bordering West Bengal. Further, the Bhubaneswar airport is experiencing congestion, and its expansion into Khorda has not fully alleviated access issues from North Odisha due to traffic congestion in Cuttack. Developing an international airport in Bhadrak could serve the northern districts and help ease pressure on Bhubaneswar
• Port accessibility remains a concern, as Dhamra
Port is currently restricted from handling general commercial imports and exports, leading to operational challenges for businesses
• Customs and regulatory processes also
present challenges, as each port requires separate registration for trade, which can lead to duplicated efforts. Implementing a single- window system for air and sea cargo through ICEGATE could streamline processes and reduce paperwork
• The current single-window system could benefit
from enhancements, and there is a strong need for government support, including grants, SIDBI loans and IDCO land, to fulfil incoming orders. Timely clearance through the single-window process would greatly assist operations, as businesses currently approach each department individually. While SIDBI is willing to provide loans due to the potential impact of innovations, delays in acquiring IDCO land remain a hurdle
State profiles 145
Puducherry
Area: 490 sq km
GSDP per capita: Rs 219,259
Agriculture share of GVA (FY23): 1.0%
Industry share of GVA (FY23): 50.2%
Services share of GVA (FY23): 48.8%
FDI inflow (FY24): $4.76 million
Key industries: Electronics and chemicals
Key enable rs
• Sound financial health
• Abundance of resources
Data score (65) Survey score (35)
Areas needing improvement
• Infrastructure
Key performance indicators
• Controlled fiscal deficit
• Strong healthcare investments
Indicators for improvement
• Capacity of cold storage facilities
Overall
rank
Score
Category
rank21/36
44.9
C | 4/7
State category
L – Large state
C – City state
N – Northeastern/hilly state
28.9 16.0
146Investment Friendliness Index
Key factors driving the state’s score
• Puducherry performs well in the financial health
and resources pillar, but there are areas for im-
provement in the infrastructure pillar
• Puducherry’s score in the financial health pillar is driven by a low gross fiscal deficit as a per-
centage of GSDP, estimated at 2.88% for fiscal 2024, which is below the national average of 6.1% and the guideline laid out by the 15th Fi-
nance Commission of 3% over fiscals 2023-26
• In fiscal 2025, expenditure on medical and pub- lic health and family welfare in Puducherry ac-
counted for 9% of the aggregate expenditure, surpassing the national average of 6%
• Another indicator contributing to Puducherry’s overall score is its robust own tax revenue as a percentage of GSDP, which stood at 14.9%, com- pared with 5.1% for peer states
• Puducherry has lower cold-storage capacity by manufacturing GVA than four out of the six other states in the same category—this is an area for improvement
State’s relative performance across pillars
40%
48%
45%
53%
80%
69%
42%
30%
Puducherry achieves an overall score of 44.9, placing it fourth among City States/Union Territories
and 21st overall. This score is driven by sound financial health and performance in the resources
pillar. However, there are significant areas for improvement within the infrastructure pillar.
Best statePillar average
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
State profiles 147
Punjab
Area: 50,362 sq km
GSDP per capita: Rs 178,433
Agriculture share of GVA (FY23): 12.7%
Industry share of GVA (FY23): 27.2%
Services share of GVA (FY23): 60.1%
FDI inflow (FY24) : $180.08 million
Key industries: Food processing, basic metals,
coke and refined petroleum products
Key enable rs
• Good infrastructure
• Favourable institutional environment
Data score (65) Survey score (35)
Areas needing improvement
• Financial health
Key performance indicators
• High rail density
• Effective grievance redressal mechanism
Indicators for improvement
• Total outstanding liabilities
Overall
rank
Score
Category
rank22/36
44.7
L |14/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
21.4 23.3
148Investment Friendliness Index
Key factors driving the state’s score
• Punjab’s score can be attributed to its strong
performance in the regulatory ease and
institutional environment pillars, supported by
healthy performance in the infrastructure and
business climate pillars
• Resources and financial health have been identified as pillars for improvement for the state
• Punjab’s high score in institutional environment can be attributed to its low cybercrime rate of ~4%, which is lower than the category average, controlled economic crime rate at ~5%, again lower than its category average, and favourable perception scores in the grievance redressal mechanism (highest among large states)
• Punjab’s strong score in regulatory ease can be explained by investor satisfaction in the time
taken for availing construction permits (scoring seven points higher than the category average) as well as utility connections (four points higher than the category average)
• The state’s strong railway density, among the top five in Indian states, transmission and distribution losses (4%), which are lower than the category average, help it score well in the infrastructure pillar
• Punjab’s high proportion of patent applications as a percentage of number of registered enterprises, which is ~12% higher than the category average, drives its strong business climate scores
• Punjab’s consistently high share of outstanding liabilities, 46% of GSDP over the past five years and 16% higher than the category average in fiscal 2024, coupled with interest payments of 4-5% of GSDP (compared with the ~3.1% category
State’s relative performance across pillars
32%
20%
67%
72%
42%
69%
48%
36%
Punjab has attained an overall score of 44.7, ranking 14th among large states and 22nd overall.
Strengths include infrastructure, driven by its rail density, with opportunities for improvement
within the financial health pillar since the state has high total outstanding liabilities.
Best statePillar average
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
State profiles 149
average) highlight areas for improvement within
the financial health pillar and the need for
stronger financial controls
• Punjab could also focus on improving its allocation to education expenditure, currently 4% lower than the category average, which would help improve the technical workforce and STEM enrolment.
Voices from the ground
Areas of strength:
• The state benefits from a strong and accessible railway network that enhances overall industrial connectivity. The reliability and reach of the rail system provides an efficient option for freight movement, supporting multimodal logistics and helping businesses manage transportation costs and timelines more effectively
• The industrial policy framework, along with the rules and regulations in place, is transparent and flexible. This clarity in policy and regulatory processes enables smoother planning and execution for businesses. The flexibility offered allows companies to adapt quickly to market needs
• The single-window system is efficient, offering timely clearances and a smoother approval experience. The portal is streamlined and responsive, and the NOC process functions effectively. This reduces administrative delays and enhances ease of doing business for both new and expanding enterprises
• Regulatory processes such as environmental
clearances, construction permits and commercial contract approvals operate smoothly, supported by transparent labour laws. The predictability and clarity across these processes contribute to faster project implementation and create a more conducive operating environment for businesses
Areas of focus:
• There is scope to enhance road quality across certain regions to improve overall connectivity. Improving road conditions would support smoother movement of goods and people and strengthen last-mile logistics efficiency
• Power supply reliability can be further improved by reducing outages and interruptions. More consistent power availability through grid strengthening or better backup mechanisms would help industries operate without disruption, particularly those with continuous production requirements
• Land allotment processes offer room for additional transparency and procedural clarity. More streamlined and clearly communicated steps in land allocation would help businesses plan projects with greater predictability and reduce administrative uncertainty
• Disaster management systems can be strengthened by adopting more advanced technologies and quicker response mechanisms. Enhancing preparedness, real-time monitoring and response capabilities would boost overall resilience and create a more secure operating environment for industries
150Investment Friendliness Index
Rajasthan
Area: 342,239 sq km
GSDP per capita: Rs 122,629
Agriculture share of GVA (FY23): 12.7%
Industry share of GVA (FY23): 28.4%
Services share of GVA (FY23): 58.9%
FDI inflow (FY24) : $265.43 million
Key industries: Basic metals, food processing and
chemicals
Key enablers
• Abundance of resources
• High regulatory ease
Data score (65) Survey score (35)
Areas needing improvement
• Business climate
Key performance indicators
• High share in mineral production
• Ease of obtaining construction
permits
Indicators for improvement
• Credit to industries by banks
Overall
rank
Score
Category
rank10/36
48.1
L | 8/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
25.2 22.9
State profiles 151
State’s relative performance across pillars
Key factors driving the state’s score
• Rajasthan is among the top-performing states
in resources, regulatory ease and government
policy, with areas for improvement in the
business climate, institutional environment and
financial health pillars
• Rajasthan’s strong performance in resources
is driven by it accounting for 33% of the non- metallic mineral production of India, 14% of the metallic mineral production and a strong renewable resource potential ranking first, third and first, respectively, across the three indicators
• Rajasthan does consistently well across all
indicators in the regulatory ease pillar
• In perception scores for construction permits,
Rajasthan ranks among the top three states in the large state category, scoring six points above the category average
• In the infrastructure pillar, Rajasthan is a top
performer in warehousing capacity, ranking third
• Areas for improvement in business climate are
improving FDI inflows, currently 12% below category average, and focusing on improving MoU conversion of announced investments from the current ranking of 11th among large states
• The state can also improve its bank credit
to industry since it is 4% lower than the category average when measured against the manufacturing GSDP
51%
48%
67%
63%
52%
71%
43%
29%
Rajasthan has attained a score of 48.1, ranking eighth among large states and 10th overall.
Strengths include an abundance of natural resources driven by a high share in mineral produc-
tion with opportunities for improvement in the business climate pillar.
Best statePillar average
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
152Investment Friendliness Index
Voices from the ground
Areas of strength
• The state offers well-developed road networks
and smooth inter-state connectivity. This not
only facilitates seamless movement of goods
but also improves vehicle efficiency and
mileage, contributing to lower operating costs
for businesses. The railway network is similarly
reliable, providing an efficient alternative for
freight movement and enhancing multimodal
logistics capabilities
• Industrial parks across the state are equipped
with modern, well-maintained facilities. The availability of reliable utilities—power, water, and waste management—and strong connectivity within these zones help efficiency. Many parks also offer startup-friendly plug- and-play infrastructure, enabling faster setup times and reducing initial capital hurdles. Continuous upgrades in these parks indicate a proactive approach toward expanding industrial capabilities
• The state provides stable and high-speed
internet connectivity, which is increasingly essential for modern manufacturing and service operations. In addition, logistics and warehousing infrastructure is well-developed, enabling efficient storage, distribution and supply chain management. This strong digital and physical backbone significantly improves ease of doing business for companies operating in the region
Areas of focus:
• While major highways are strong, there is scope
to further enhance road conditions in interior regions. Targeted improvements in these areas would significantly boost last-mile connectivity and support smoother movement of goods and workforce
• Intermittent power cuts and seasonal
fluctuations can be improved. Addressing these through grid strengthening or alternative power backup solutions could create a more stable environment for industries with continuous production needs
• Greater communication and information
dissemination around available schemes such as the Investment Promotion Agency (IPA) would help more businesses benefit from them. Proactive outreach and simplified guidance could improve scheme utilisation
• Additional efforts in workforce skilling, job
creation, and entrepreneurship development, particularly targeted at startups and MSMEs, would further strengthen the state’s talent ecosystem and industrial competitiveness
• While the system is in place and helpful,
businesses indicated that additional streamlining could make approvals and clearances even more seamless. Continued digital integration and process optimisation would enhance ease of doing business
Hs Vsd oqn kdr 153
Sikkim
Area: 7,096 sq km
GSDP per capita: Rs 407,567
Agriculture share of GVA (FY23): 5.5%
Industry share of GVA (FY23): 63.8%
Services share of GVA (FY23): 30.7%
FDI inflow (FY24): Not available*
Key industries: Pharmaceuticals, medicinal
chemicals and botanical products
Key enable rs
• Supportive business climate
• Abundance of resources
Data score (65) Survey score (35)
Areas needing improvement
• Institutional environment
• Regulatory ease
Key performance indicators
• GSDP per capita
• High female workforce participation rate
Indicators for improvement
• Grievance redressal mechanism
Overall
rank
Score
Category
rank32/36
36.6
N |10/12
State category
L – Large state
C – City state
N – Northeastern/hilly state
24.3 12.3
* Not available” indicates nonavailability of published data
154Investment Friendliness Index
Key factors driving the state’s score
• Sikkim’s strong performance in the business cli-
mate pillar is driven by a high per capita GSDP
of approximately Rs 4.07 lakh for fiscal 2024, the
second-highest among states. Further, Sikkim’s
five-year GSDP growth rate (fiscals 2019-2024)
stood at ~5.9%, compared with India’s 4.8%. The
state also performs strongly in terms of number
of incubators per capita, nearly four times the
average for hilly and northeastern states
• Sikkim’s human resources indicators are favour-
able, with a high labour force participation rate of 57% (above the national average of 47%) and a healthy female workforce participation rate of 66% (highest nationally) in fiscal 2024
• The state faces challenges in infrastructure and regulatory aspects, with investor satisfaction regarding single-window permissions and NOCs for starting businesses being relatively low. This
has impacted performance in the regulatory challenge pillar, even with the integration into the National Single Window System
• Investor perception score of Sikkim’s grievance redressal mechanism is ~40% lower than the av-
erage perception score among northeastern and hilly states
• Investor perception of transport infrastructure is less favourable, particularly due to the Pakyong greenfield airport (Sikkim’s first greenfield air-
port), which becomes non-operational at times due to weather and technical issues. This situ-
ation has constrained air connectivity and ad-
versely affected the region’s economic potential
Voices from the ground
Areas of focus:
• Investors pointed out the need for an operational airport as that would significantly improve con- nectivity, ease of travel and accessibility for resi-
State’s relative performance across pillars
38%
19%
31%
47%
52%
63%
32%
39%
Sikkim has an overall score of 36.6, ranking 10th among northeastern and hilly states and 32nd
overall. This score is driven by its performance in the business climate and resources pillars. How-
ever, there are significant areas for improvement in the institutional environment, regulatory ease
and infrastructure pillars.
Best statePillar average
Infrastructure
Business climate
Resources
Government
policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
State profiles 155
dents and businesses. Improved air connectivity
would support economic activity, tourism, medi-
cal access, and overall mobility
• Road infrastructure can be strengthened to better withstand weather-related disruptions. During the monsoon, road stretches, including
the key highway link, often become non-opera- tional, causing challenges in transportation and essential services. Enhancing weatherproofing and resilience of these routes would help ensure uninterrupted movement and support economic, health, and education activities in the region
156Investment Friendliness Index
Tamil Nadu
Area: 130,060 sq km
GSDP per capita: Rs 217,801
Agriculture share of GVA (FY23): 4.6%
Industry share of GVA (FY23): 37.8%
Services share of GVA (FY23): 57.6%
FDI inflow (FY24): $2,436 million
Key industries: Automobile, machinery and
equipment, and electronics
Key enablers
• Good infrastructure
• Supportive business climate
Data score (65) Survey score (35)
Areas needing improvement
• Financial health
Key performance indicators
• Low turnaround time for ports
• Strong export performance
Indicators for improvement
• Interest payments as a percentage
of GSDP
Overall
rank
Score
Category
rank3/36
53.3
L | 3/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
29.7 23.6
State profiles 157
State’s relative performance across pillars
Key factors driving the state’s score
• Tamil Nadu is ranked third overall, with a good
score in the infrastructure and business climate
pillar
• Tamil Nadu’s 1st rank in the infrastructure
pillar among large states can be explained by its efficient port infrastructure, with the state ranking 3rd in turnaround time at ports weighed by capacity, low electricity downtime, 4% below the large-state average and contained T&D losses ~3% below the large-state average
• Tamil Nadu also excels in export performance,
with its 36% export-to-GSDP ratio being higher than the category average
• Tamil Nadu has room for improvement in
logistics infrastructure, with low CFS and ICD
capacity, 33% below the large-state average, relative to its manufacturing GVA
• The scores in the business climate pillar were
driven by the state having the second highest number of ATLs in India and a high MoU conversion rate. Investors commended the state on its consistency in policies
• In the government policy pillar, Tamil Nadu’s
stakeholder satisfaction score with state policies is good, reflecting positively on the state’s policy formulation and implementation processes
• Tamil Nadu also excels in the environment
resilience pillar, boasting 22% better-than- average air quality index (AQI) levels compared with its category average, as well as high perception scores regarding the state’s disaster preparedness
45%
30%
67%
70%
64%
80%
54%
46%
Tamil Nadu has an overall score of 53.3, ranking 3rd in both the overall and the large-state cat-
egory. Tamil Nadu’s score is driven by its strong performance in the infrastructure and business
climate pillars, with financial health being an area of improvement.
Best statePillar average
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
158Investment Friendliness Index
• Tamil Nadu’s financial health score is marginally
below average due to higher interest payments
(3.4% of GSDP) and high debt burden (total
outstanding liabilities at 31% of GSDP, close to
the pan-India average)
Voices from the ground
Areas of strength:
• Tamil Nadu’s road connectivity is exceptional,
with well-maintained roads connecting villages and cities, as well as high-quality state highways linking major industrial cities such as Chennai, Coimbatore, and Hosur
• The state has a dense rail network that connects
all major industrial cities and ports, including Chennai, Ennore, and Thoothukudi, facilitating efficient cargo movement for industries such as automobiles, cement, and textiles
• Tamil Nadu’s power grid is reliable, with a
renewable energy base, particularly wind and solar power, ensuring a consistent supply for industrial clusters such as Sriperumbudur, Hosur, and Coimbatore
• The state’s industrial parks, such as those
developed by SIDCO and SIPCOT, are well- planned, with amenities such as utilities, power, and road connectivity, making them attractive to global players in the auto and electronics sectors
• Tamil Nadu boasts one of India’s strongest
talent pools, with a large network of engineering
colleges, ITIs, and polytechnics, providing industries with access to disciplined, semi- skilled, and skilled workers at competitive costs
• The state has a well-structured investor
facilitation framework, including the Biz Buddy and Guidance Tamil Nadu Investor Facilitation Portal, which provides a fully digital, time- bound, and closely monitored grievance redressal system, with issues typically resolved within 30 days
Areas of focus:
• Chennai’s airport may benefit from expansion
to better serve the city’s growing population and business needs, particularly in terms of international connectivity, with currently limited direct flights to Europe despite the presence of many European MNCs
• Water availability is a challenge in certain areas
of Tamil Nadu, with difficulties in accessing water for industrial use, as well as limited availability of sewage water for treatment and reuse, particularly in land-locked areas and rain shadow zones
• The road infrastructure surrounding Chennai
Port could be improved, with current congestion and delays causing significant inefficiencies, including lengthy wait times of up to 36 hours for trucks to enter and exit the port, which can impact the viability of trucking operations
Hs Vsd oqn kdr 159
Telangana
Area: 112,077 sq km
GSDP per capita: Rs 217,801
Agriculture share of GVA (FY23): 8.2%
Industry share of GVA (FY23): 22.5%
Services share of GVA (FY23): 69.3%
FDI inflow (FY24): $3,029.07 million
Key industries: Pharmaceuticals, medicinal
chemicals and botanical products
Key enable rs
• Regulatory ease
• Supportive business climate
Data score (65) Survey score (35)
Areas needing improvement
• Institutional environment
Key performance indicators
• Strong STEM enrolment
• High tax revenue
Indicators for improvement
• Crime rate – economic and cyber
Overall
rank
Score
Category
rank13/36
47.3
L |10/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
25.3 22.0
160Investment Friendliness Index
Key factors driving the state’s score
• Telangana demonstrates strong performance in
the business climate and regulatory ease pillars.
A key driver of the high score in the regulatory
ease pillar is the Telangana State Industrial
Project Approval and Self-Certification System
(TS-iPASS), which has digitised and streamlined
construction permits
• The business climate pillar is influenced by various indicators, including land availability. Telangana has one of the largest land areas available for allotment among states, with its available land as a percentage of state area being three times that of the category average
• Further, the state’s high own-tax revenue as a percentage of GSDP, standing at 17% in fiscal 2024, surpassing the pan-India average of 9.8%, indicates robust state tax collection, allowing flexibility in spends
• In Telangana, the percentage of students enrolled in STEM against the total enrolment in higher education was twice the national average in fiscal 2022
• The state hosts well-functioning commercial courts equipped with modern e-filing systems, enhancing judicial efficiency for business disputes
• The state scores low on the institutional environment pillar, primarily due to elevated crime rates, particularly in economic offences and cybercrimes
• Telangana has one of the highest crime rates in India, particularly in economic offences, which reached 75 per lakh population in 2022, compared with an average of 16 per lakh population across the states. Additionally, cybercrimes were recorded at 43 per lakh population in 2022, significantly exceeding the pan-India average of 5 per lakh population
State’s relative performance across pillars
44%
36%
63%
48%
67%
76%
42%
39%
Telangana has an overall score of 47.3, ranking 10th in the large state category and 13th overall.
The state’s score is driven by its performance in the business climate and regulatory ease pillars.
However, there are areas for improvement in the institutional environment pillar.
Best statePillar average
Infrastructure
Business climate
Resources
Government
policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
State profiles 161
Voices from the ground
Areas of strength:
• Hyderabad’s strategic location at the centre
of the South-Central Railway zone provides
excellent passenger connectivity, while the
expansion of freight capacity through new
industrial sidings and cargo terminals at Kazipet
and Sanathnagar enhancing the state’s logistics
infrastructure
• The TS-iPASS is widely regarded as one of India’s most efficient single-window mechanisms, offering fully online, time-bound approvals with automatic clearances, making it exceptionally easy for investors and industries to operate in the state
• The state benefits from a clear policy framework for industries to exit smoothly, ensuring that the interests of investors, employees, and financial institutions are protected, and providing a stable and predictable environment for businesses
• Hyderabad is consistently ranked as one of the best cities to live in India, offering a high quality of life, affordability, excellent education, and healthcare facilities, as well as a low crime rate and minimal destruction factors, making it an attractive destination for talent and businesses
• Telangana’s power supply is highly reliable, with high utilisation and minimal power outages, which are typically short in duration, and minimal load-shedding for industrial feeders, ensuring a stable and uninterrupted supply of power to industries and businesses
Areas of focus:
• While Telangana has made progress in ease of doing business, there is still room for improvement in terms of reducing costs and timelines for setting up and operating a business, particularly when compared with other business-friendly states
• While the TS-bPASS system has streamlined the process for obtaining construction permits for residential and small commercial projects, there is still scope for improvement in terms of timelines and inter-departmental coordination for larger industrial or commercial projects
• The automobile industry faces challenges in Telangana due to high taxes and a complex RTO system, which can make it difficult to operate a viable business in the state
• There may be opportunities for improvement in terms of accountability and efficiency in the issuance of NOCs and power supply, as well as in the coordination between agencies, to ensure a smoother experience for businesses
• First-time entrepreneurs and MSMEs require additional support and guidance to navigate the documentation requirements, which can be complex and time-consuming, and may benefit from more streamlined and accessible processes
162Investment Friendliness Index
Tripura
Area: 10,486 sq km
GSDP per capita: Rs 125,352
Agriculture share of GVA (FY23): 13.6%
Industry share of GVA (FY23): 27.3%
Services share of GVA (FY23): 59.1%
FDI inflow (FY24): $0.19 million
Key industries: Rubber and plastics, and food
processing
Key enablers
• High regulatory ease
• Favourable institutional environment
Data score (65) Survey score (35)
Areas needing improvement
• Business climate
Key performance indicators
• Ease of business closure
• Effective grievance redressal
mechanism
Indicators for improvement
• Industrial area available for
allotment
Overall
rank
Score
Category
rank20/36
45.0
N | 4/12
State category
L – Large state
C – City state
N – Northeastern/hilly state
22.4 22.6
State profiles 163
State’s relative performance across pillars
Key factors driving the state’s score
• Tripura excels in the regulatory challenge and
institutional environment pillars. However, there
are areas for improvement in the infrastructure
pillar
• Tripura performs well in agri-logistics
infrastructure, boasting a cold-storage capacity of ~51,140 MT. This translates to a cold-storage capacity as a proportion of manufacturing GVA that is 2.3 times the peer average. Additionally, the cold-storage capacity as a percentage of manufacturing GVA at about 39% is the highest among northeastern states and 23% above the pan-India average
• Tripura also performs strongly on regulatory
perception indicators, particularly speed of land
allotment, construction permits, and grievance redressal mechanisms (where it scored highest in its category). This places it among the better- performing northeastern states in institutional transparency
• In the ease of exit indicator, Tripura scores
10 points more than the category average. Meanwhile, in terms of perception of the grievance redressal mechanism, the state has achieved the highest score among northeastern and hilly states
• The business climate pillar has areas for
improvement, as the number of ATLs per capita stands at 5.4%, compared with the category average of ~15%
34%
46%
68%
74%
55%
71%
40%
26%
Tripura has a score of 45.0, ranking 4th among northeastern and hilly states and 20th overall.
This score is primarily driven by significant regulatory ease and strong institutional environment.
However, there are notable areas for improvement within the business climate pillar.
Best statePillar average
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
164Investment Friendliness Index
• Tripura’s strategic location on the eastern
border provides access to Bangladesh and
Bay of Bengal ports. Yet, its export share
remains negligible (<0.01% of India’s total; ~$15
million in fiscal 2023) due to limited product
diversification and trade facilitation gaps
• Key challenges in starting a business in the
state include poor last-mile connectivity and lack of internet access in rural areas, slow documentation and approval processes, and relatively high compliance costs
• Tripura’s availability of industrial land for
allotment as a percentage of the total state area stands at ~2.6%, compared with the category average of about 21%
Voices from the ground
Areas of strength:
• The state offers strong transportation
connectivity through roads. Road connectivity is good, and the railway network functions effectively, supporting reliable movement of goods
• Power supply is stable with no major outages,
and the state’s digital infrastructure is robust, offering high-speed connectivity and wide network coverage
• Land approval processes are efficient,
and construction permit procedures are transparent. The state offers a smooth and predictable experience for land allocation, and the construction permit process follows clear and transparent guidelines, improving ease of doing business for new and expanding industries
Areas of focus:
• The state has significant potential to serve
international markets on the eastern side, but growth has been slower than its strategic location suggests. Leveraging its position more
effectively through infrastructure expansion and stronger trade linkages would help unlock broader economic opportunities
• Road conditions in several areas can be improved
to enhance internal connectivity. Strengthening road quality would support smoother logistics movement and improve access across the state
• Air connectivity can be expanded beyond the
current single airline operating in the state. Stronger regional air links connecting Tripura with Assam, Meghalaya, Mizoram, Nagaland, and Arunachal Pradesh would position the state more effectively as a gateway to the Northeast and support both business and tourism
• Greater clarity and accuracy in the functioning
of the Investment Promotion Agency would be beneficial. More consistent communication, streamlined information, and better guidance on schemes and incentives would help investors engage with the agency more effectively
• Availability of skilled workforce can be improved
through targeted training initiatives. Focused skilling programmes aligned with industry needs would help address talent gaps and support sectors with growing manpower requirements
• Quality of life indicators can be improved to
attract and retain talent. Enhancements in urban amenities, social infrastructure, and public services would help create a more attractive living environment for the workforce
• The single-window system offers scope for
greater efficiency. Strengthening digital integration and reducing procedural steps would help streamline approvals and improve ease of doing business
• Disaster management systems can be
strengthened with the use of advanced technologies. Adopting real-time monitoring, predictive tools, and faster response frameworks would enhance resilience and improve preparedness during natural events
Hs Vsd oqn kdr 165
Uttar Pradesh
Area: 240,928 sq km
GSDP per capita: Rs 70,661
Agriculture share of GVA (FY23): 14.7%
Industry share of GVA (FY23): 28.8%
Services share of GVA (FY23): 56.5%
FDI inflow (FY24) : $333.61 million
Key industries: Food processing and electronics
Key enable rs
• Supportive business climate
• Favourable institutional environment
Data score (65) Survey score (35)
Areas needing improvement
• Environment resilience
• Financial health
Key performance indicators
• Extensive ATL presence
• Consistency in state policies
Indicators for improvement
• Air quality index
Overall
rank
Score
Category
rank19/36
45.0
L |13/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
23.4 21.6
166Investment Friendliness Index
Key factors driving the state’s score
• Uttar Pradesh has performed well in the business
climate and institutional environment pillars;
however, environment resilience and financial
health remain areas for improvement
• The state has demonstrated progress in fostering
a supportive business environment through improvements in economic performance, innovation and business facilitation. Its capital expenditure outlay as a percentage of GSDP increased to 13% in fiscal 2024 from 8% in fiscal 2019, reflecting a CAGR of ~10%. Capex as a percentage of GSDP in fiscal 2024 was ~40% higher than the average for large states
• The state’s improving startup ecosystem highlights its maturing business landscape, with the number of startups registered increasing to 3,426 in fiscal 2024 from 807 in fiscal 2019. In
fiscal 2023, the percentage of startups registered
compared with the total number of companies was 13% higher than the average for large states
• Uttar Pradesh has rapidly become a national leader in transport infrastructure, accounting for the largest share of India’s access-controlled expressway network
• The state has made significant strides in promoting innovation and creativity among
students through a wide network of ATLs, ranking
third-highest among states with a total of 955 ATLs in 2023. These labs, established under the Atal Innovation Mission, have played a key role in fostering a culture of experimentation and
problem-solving at the school level. The extensive
coverage of ATLs across districts reflects the
state’s emphasis on strengthening the innovation
pipeline and nurturing future talent
• Policy stability and predictability have emerged as strong enablers of investor confidence in the
state. It is reflected in the industrial, logistics and
startup policies, ensuring reforms are followed through and objectives are sustained across political cycles
• However, the state faces considerable exposure
State’s relative performance across pillars
38%
28%
60%
66%
64%
62%
45%
33%
Uttar Pradesh has an overall score of 45.0, thereby ranking 13th in the Large state category and
19th overall. As India’s most populous state, Uttar Pradesh has a significant strategic and economic
position owing to its large domestic market, improving infrastructure base and growing industrial
ecosystem. The state has leveraged its demographic advantage and proactive governance reforms to
strengthen its position as a prominent investment destination in northern India.
Best statePillar average
Infrastructure
Business climate
Resources
Government
policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
State profiles 167
to natural and environmental risks that can
impact both human well-being and long-term
investment sustainability. A major challenge
is from persistently poor air quality across
several industrial and urban regions, reflecting
the combined effects of vehicular emission,
construction activity and seasonal agricultural
practices. For majority of the year, cities such as
Noida, Greater Noida, Ghaziabad, Bulandshahr,
and Muzaffarnagar experience AQI levels ranging
between 200 and 300. Further, the majority of
the remaining cities typically record AQI levels
between 100 and 200 for the greater part of the
year
• Also, there is scope for improvement in the financial health pillar. The state’s interest payments as a percentage of its GSDP are 13% higher than the average for large states. Further, the gross fiscal deficit of UP as a percentage of GSDP is ~4% higher than its category average
• Addressing these challenges through stricter
enforcement of environmental norms, investment
in clean technologies and coordinated regional efforts will be essential for the state to sustain its growth momentum, while ensuring a more sustainable development trajectory
Voices from the ground
Areas of strength
• The state boasts excellent railway and airport facilities, which are comparable to or better than those in other states
• The state government has also introduced subsidies to promote industrial growth, and, overall, the experience of doing business in Uttar Pradesh has improved slightly. While there is still room for more flexibility and transparency, the state fares marginally better than its neighbours
• Uttar Pradesh has made significant strides in
streamlining the process of obtaining warehouse
construction permits, particularly in Greater Noida, where approvals can be obtained in as
little as 15-20 days. This is a marked improvement
over regions such as Faridabad and Manesar, where the process can take up to a month. The state’s efforts to invest in this area have yielded encouraging results, making it an attractive destination for businesses
• Uttar Pradesh offers a readily available and
diverse workforce, ensuring no productivity issues
for the manufacturing sector. However, the state faces a challenge in retaining talent, particularly in the Kanpur area, as many professionals prefer to relocate to the NCR due to inadequate infrastructure and lower salaries
Areas of focus
• While the state’s highways are well-maintained, the roads within cities, particularly in Kanpur, could benefit from improvement to reduce
congestion and enhance overall connectivity. The
industrial road infrastructure requires upgrading
as well to support the growth of industries in the state
• There is a need to diversify the location of industrial parks beyond Noida, with cities such as Kanpur, which has a strong industrial base, deserving of similar investments
• The ICDs in UP face challenges such as:
- Congestion
- Variable customs clearance times
- Limited digitalisation
• Adopting best practices from other states, such as
implementing RFID gate systems, 24/7 customs
support and transparent tariff dashboards, could
improve efficiency and reliability.
• The state’s power supply infrastructure requires attention, with issues such as:
- Unreliable industrial-grade supply
- Frequent outages
- High transmission losses
• Implementing feeder segregation for industry, rapidly upgrading substations, rolling out smart meters, and instituting clear service level agreements for distribution companies could help mitigate these issues.
• Exploring options to improve the efficiency and responsiveness of the power sector, such as privatisation, could help address the frequent power faults and difficulties in resolving issues with the current system
• Simplifying the process of obtaining NOCs by reducing paperwork and introducing digital solutions could help streamline business operations
168Investment Friendliness Index
Uttarakhand
Area: 53,483 sq km
GSDP per capita: Rs 202,573
Agriculture share of GVA (FY23): 3.7%
Industry share of GVA (FY23): 50.4%
Services share of GVA (FY23): 45.9%
FDI inflow (FY24): $60.13 million
Key industries: Automobile and chemicals
Key enablers
• Abundance of resources
• Sound financial health
Data score (65) Survey score (35)
Areas needing improvement
• Infrastructure
• Government policy
Key performance indicators
• Strong inflow of graduates to the
workflow
• Controlled fiscal deficit
Indicators for improvement
• Airport capacity per capita
Overall
rank
Score
Category
rank11/36
47.5
N | 1/12
State category
L – Large state
C – City state
N – Northeastern/hilly state
25.3 22.2
State profiles 169
State’s relative performance across pillars
Key factors driving the state’s score
• Uttarakhand offers excellent banking facilities
and financial availability, complemented by a
favourable industrial environment
• The state provides a seamless and efficient
experience for businesses, with all government- related paperwork processed through a single- window online platform in a short timeframe. Also, in 2024, the number of patents filed was 1,637, which was 28% higher vs the pan-India average. This indicates a robust environment for innovation and a commitment towards fostering intellectual property development
• The state has also excelled in the number
of individuals entering the workforce as a percentage of the population, at 1.32%, the
highest among northeastern and hilly states
• Uttarakhand had a fiscal deficit of 4.4% in fiscal
2024, which was ~3% lower than the category average, albeit still higher than the limit set out by the 15th Finance Commission
• Utility connections are readily accessible in the
industrial areas of Uttarakhand, scoring four points above the category average. The state also boasts a robust disaster management system, scoring three points higher than the category average. This well-equipped framework provides an added layer of security and resilience for businesses operating in the region
• With 16.7 million passengers per annum in 2023,
the airport passenger handling capacity in Uttarakhand is lower than that of six states in
47%
21%
64%
69%
77%
78%
41%
35%
Uttarakhand has attained an overall score of 47.5, ranking first among northeastern and hilly
states and 11th overall. Strengths include human resources, characterised by a strong inflow
of graduates into the workforce. However, there are opportunities for improvement in the
government policy and infrastructure pillars.
Best statePillar average
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
170Investment Friendliness Index
its peer category on a per capita basis; hence,
expansion could be explored
• The state can improve in the government policy
area as well with its performance in indicators such as capex incentive disbursed as a percentage of total industrial capex and R&D incentive disbursed as a percentage of state GVA being below the category average
Voices from the ground
Areas of strength
• The condition of highways and ICDs are
satisfactory, providing a robust transportation infrastructure for the movement of goods and people
• There is considerable availability of technically
skilled and readily available workforce, providing a significant advantage for industries
• The state’s policy framework is conducive
to business growth, with regulations and incentives supportive of entrepreneurship and investment
Areas of focus
• Power supply is stable, with no long-duration
outages; however, it has been reported that there are some unscheduled power outages and also that there is a lack of adequate dispute redressal by Uttarakhand Power Corporation Ltd
State profiles 171
West Bengal
Area: 88,752 sq km
GSDP per capita: Rs 96,618
Agriculture share of GVA (FY23): 10.5%
Industry share of GVA (FY23): 30.4%
Services share of GVA (FY23): 59.1%
FDI inflow (FY24): $181.49 million
Key industries: Basic metals, coke and refined-
petroleum products
Key enable rs
• Good infrastructure
• Favourable institutional environment
Data score (65) Survey score (35)
Areas needing improvement
• Business climate
• Government policy
Key performance indicators
• Adequate cold storage capacity
• Minimal impact of labour disruptions
Indicators for improvement
• Number of startups registered
Overall
rank
Score
Category
rank24/36
41.3
L |15/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
20 .1 21.2
172Investment Friendliness Index
Key factors driving the state’s score
• West Bengal demonstrates strong performance
in the infrastructure and institutional
environment pillars, with areas for improvement
in the government policy and business climate
pillars
• The state boasts one of the highest rail densities in the country, with railway routes per sq km of the state area twice the national average in fiscal 2023
• West Bengal has the second-largest cold storage capacity in India at ~59 lakh metric tonne (fiscal 2022), with facilities strategically located in all district headquarters and major industrial estates
• The state also benefits from a highly reliable power supply, with electricity transmission and distribution losses at ~10% below the national average in fiscal 2023
• From an institutional environment perspective, West Bengal maintains one of the lowest crime rates among major Indian states. As per the National Crime Records Bureau’s Crime in India 2022 report, cognisable crime rate in the state was only 12 incidents per lakh population against the national average of 17 per lakh population
• However, government policy emerges as an area within which improvement can be made. With respect to incentive allocation as a percentage of state budget and capex incentive disbursed as a percentage of total industrial capex, the state has performed below average for the Large state category.
State’s relative performance across pillars
35%
17%
59%
65%
45%
69%
49%
23%
West Bengal has an overall score of 41.3, ranking 15th among Large states and 24th over-
all. This score is primarily influenced by its performance in the infrastructure and institutional
environment pillars. However, there are notable areas for improvement in the government policy
and business climate pillars.
Best statePillar average
Infrastructure
Business climate
Resources
Government
policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
State profiles 173
• West Bengal, though, attracts a disproportionately
low share of FDI. Inflows totalled $428 million in
2022, decreasing to $394 million in 2023, and
falling further to $181 million in 2024. Over the
three years, this totalled only 0.67% of India’s
overall FDI share. Additionally, PE and VC activity
in the state/GSDP is subdued at 0.45% of inflows
vs the large peer state average of 2.56%
• State-wise interest payments-to-GSDP ratio of 4.85% was higher than the national average of 3.3% in 2024, impacting its financial health pillar score
• Although the situation has improved over the past three years, with a rising number of startups, the ratio of startups-to-total companies is still 2% below the category average
Voices from the ground
Areas of strength
• Power outages are rare for domestic as well as industrial consumers, and electricity charges are comparatively lower than in many other states
• There are several logistic hubs and cold storage facilities in every district headquarters as well as in each industrial estate, enhancing the state’s supply chain efficiency
• Most cities, towns and district headquarters in the state are well connected to other parts of the country through an extensive railway network that supports both passenger and goods services
• So far, there have been no issues related to a lack of skilled workforce. West Bengal has been a significant contributor to the skilled labour supply across the country for decades
• Additionally, the state government has initiated several projects aimed at creating more job
opportunities through the expansion of the MSME sector
• Kolkata is recognised as the cultural capital of India. The people of West Bengal are known for their rich cultural heritage, productivity, peace-loving nature, political engagement and readiness to protest for their rights. The crime rate in the state is low
Areas of focus
• Considerable investments are being made in Assam and other northeastern states, therefore requiring an improvement in road/rail infrastructure and connectivity. Road conditions and maintenance across the state need improvement
- Obtaining NOCs and permissions to start a
business in West Bengal requires multiple approvals, depending on the sector – comprises factory licence, trade licence, building permit, fire safety, electricity, pollution control, labour registrations, etc
- The state’s SilpaSathi single-window system
has brought some order to the process, but the number of approvals remains high, especially for manufacturing and infrastructure-heavy businesses
• Allotment of land/securing land in West Bengal has historically been one of the more complex aspects of doing business in the state, given political sensitivities around land acquisition. While there have been reforms, the experience remains mixed
174Investment Friendliness Index
Annexures
Annexure 1: List of indicators
Table 3: List of indicators—Infrastructure
Parameter Indicator Source
Logistics
Capacity of airport per capita population Lok Sabha questions
Cargo capacity of airport/manufacturing GVA Rajya Sabha question
Number of airports with international operations for
three years/area of state (sq km)
Airports Authority of India
Road density [national highway (40%) + state highway
(40%) + rural roads (20%)]/area of state (sq km)
RBI Statistical Handbook
Investment in roads/total state expenditure RBI State Finances report
Quality of roads (condition of roads and connectivity
to industrial hubs)
Perception survey
Rail density: Total length of railway tracks (km)/area of
state (sq km)
RBI Statistical
Handbook–Railways
Turnaround time weighted by capacity for major and
non-major ports
Ministry of Ports, Shipping and
Waterways, 2023 update
Capacity of ports/manufacturing GVA (container, dry
bulk, POL)
Ministry of Ports, Shipping and
Waterways, March 2024 update
Investor perception of transportation infrastructure in
the state
Perception survey
Warehousing
CFS and ICD capacity/manufacturing GVA
Press Information Bureau
(PIB)/Ministry of Finance
Total capacity of cold storage facilities (tonnage)/
manufacturing GVA
RBI Statistical Handbook
Capacity of warehousing/manufacturing GVA Gati Shakti portal
Energy
Power cost: Industrial NITI Aayog State Report
Power cost: Commercial NITI Aayog State Report
T&D loss
RBI Statistical Handbook–T&D
loss
Share of renewables in power generation capacity
NITI Aayog India Climate and
Energy Dashboard
Average electricity downtime: commercial RBI Statistical Handbook
Investor perception of the power infrastructure in the
state
Perception survey
Digital
infrastructure
5G and 4G penetration (BTS/sq km)
Department of
Telecommunications
Digital payment transactions (per capita)
Ministry of Electronics and
Information Technology
Annexures 175
Table 4: List of indicators—Business climate
Parameter Indicator Source
Industrial
parks
State-wise industrial area available for allotment/to-
tal land state area
IILB database
Perception of plug-and-play infrastructure parksPerception survey
Investor perception of other infrastructure in the
state—storage and digital
Perception survey
Parameter Indicator Source
Economic performance
GSDP per capita MoSPI
GSDP growth rate MoSPI
Capital expenditure/GSDP RBI Statistical Handbook
Exports/GSDP RBI Statistical Handbook
Innovation
Expenditure on R&D as a percentage of GSDP Self-reported by States
Incubators per lakh population
Department for Promotion of Industry and Internal Trade (DPIIT)
ATLs in the state per capita Atal Innovation Mission
Number of patent applications filed/number of enterprises
IP India annual report
Business facilitation
State tax revenue/GSDP RBI Statistical Handbook
FDI inflows as a percentage of GSDP
PIB (Reply given in Lok Sabha by the Minister of Commerce and Industry)
State-wise credit to industry by banks/manufacturing GSDP
RBI Handbook of Statistics on Indian States
Number of functioning branches of commercial banks per lakh population
RBI Handbook of Statistics on Indian States
Total value of PE and VC investments in the state/GSDP
Indian Venture and Alternate Capital Association
Investor satisfaction with investor facilitation centres, based on information availability, handholding of investors and other support provided
Perception survey
MoU conversion rate: MoUs converted/investments announced during each financial year
Self-reported by states
Number of startups as a share of the number of companies registered in that year
PIB/DPIIT
New businesses registered in the state as a share of the number of businesses registered in India
Ministry of Corporate Affairs
Medium and small enterprises as a proportion of total MSMEs in the state
Udyam dashboard
176Investment Friendliness Index
Parameter Indicator Source
Natural
resources
Annual extractable ground water resource
(bcm)/area of the state
Central Ground Water Board
Share of state in national metallic minerals
production (in value)
Ministry of Mines
Share of state in national non-metallic minerals
production (in value)
Ministry of Mines
Share of state in national coal and lignite productionCoal Controller Organisation
Renewable resource potential
(solar + wind + hydro + bioenergy)
Ministry of New and Renewable
Energy
Human
resources
Percentage of students enrolled in STEM courses
against the total enrolment in higher education
in the state
Directorate of Higher Education
(DHE)
New technical workforce added each year as a
percentage of population (i.e., industrial training
institutes, engineering)
DHE
Number of people entering the workforce as a
percentage of population (graduates and
post-graduates)
DHE
Women workforce participation rate
Periodic Labour Force Survey
(PLFS)
Working age population/total population PLFS
State government budget on skilling/total budgetSelf-reported by states
Vocational training capacity as a percentage of the
population
Ministry of Skill Development and
Entrepreneurship
Percentage of colleges in the state in the top 100
National Institutional Ranking Framework (NIRF)
list/ number of colleges in the state
NIRF
Workforce quality Perception survey
State expenditure on education as a percentage of
GDP
RBI State Finances report
Quality of life – availability of schools, hospitals,
social infra, job opportunities for family
Perception survey
Healthcare investments in the state/state’s capital
expenditure
RBI State Finances report
Table 5: List of indicators—Resources
Annexures 177
Parameter Indicator Source
Compliance
requirements
No-objection certificates/permissions to start a
business
Perception survey
Land allotment and use Perception survey
Environmental clearance Perception survey
Ease of exit (average time to close) Perception survey
Construction permits Perception survey
Utility connections: electricity and water Perception survey
Enforcement
quality
Investor satisfaction with the single-window policyPerception survey
Ease of contract enforcement and access to dedicated
commercial courts
Perception survey
Table 7: List of indicators—Regulatory ease
Table 8: List of indicators—Financial health
Parameter Indicator Source
Debt profile
Total outstanding liabilities as a percentage of GSDP
RBI Handbook of Statistics on Indian States
State’s interest payments as a percentage of GSDP
RBI Handbook of Statistics on Indian States
Fiscal balance
State’s gross fiscal deficit as a percentage of GSDP
RBI Handbook of Statistics on Indian States
Parameter Indicator Source
Incentive support
Capex incentive disbursed in a year/total Industrial capex
Self-reported by states
Incentive allocation/state budget Self-reported by states
R&D incentive disbursed/state GVA Self-reported by state
Policy effectiveness
Stakeholder satisfaction score with state policies: design, time taken for approvals and time for disbursement
Perception survey
Table 6: List of indicators—Government policy
178Investment Friendliness Index
Table 10: List of indicators—Environment resilience
Parameter Indicator Source
Risk
exposure
Percentage of the state’s area in earthquake zone VMinistry of Earth Sciences
State-wise AQI
Ministry of Environment, Forest
and climate Change
Weighted parameter for number of cyclones, days
of flooding and number of landslide events (equal
weightage)
National Disaster Management
Authority
Disaster-
readiness
Disaster preparedness of the state Perception survey
Table 9: List of indicators—Institutional environment
Parameter Indicator Source
Security and stability
Crime rate in the state: economic offences
National Crime Records Bureau (NCRB)
Number of cybercrimes in the state NCRB
Severity of labour disruptions Perception survey
Policy consistency and governance
Regulatory environment Perception survey
Grievance redressal mechanism Perception survey
Consistency in state policies Perception survey
Annexures 179
Figure 19: Scoring methodology for secondary indicators
Annexure 2: Detailed scoring methodology for secondary indicators
For secondary indicators, minimum-maximum normalisation was adopted for scoring (see Figure 19).
Check if there are extreme
outliers in the range
Min-max normalisation
Trimmed Min-max normalisation
Min-max normalisation is the default
standardisation method and will be
used for most secondary indicators
• Use when: 1 outlier
• Condition: If the highest value exceeds the second-highest by >40 points
• Steps:
- Highest value 100
- Second-highest value 90
- Others scaled between 0–90 using Min-max
Use when: More than 1 outlier Condition: Gap between lowest extreme outlier is separat- ed from the rest by >40 point gap Steps involved when there are two outliers: Highest value 100 Second-highest value 95 Third highest value 90 Others scaled between 0–90 using Min-max
1. For most secondary indicators, min-max nor-
malisation was the preferred approach. In
this method, the raw data for each indicator is
converted into a standardised score between
0 and 100. This is done by first identifying the
minimum and maximum values of the indicator
across all 36 states and Union Territories. For
each state, the minimum value is subtracted
from its raw score, and the result is then divided
by the range of the data, i.e. the difference be-
tween the maximum and minimum values. This
process ensures that the state with the lowest
value gets a score of 0, the one with the highest
value gets a score of 100, and all others fall pro-
portionally in between. For indicators where a
lower value represents better performance, the
formula is reversed so that higher scores always
reflect better outcomes.
2. To ensure fair and representative scoring across
data points, a trimmed min–max normalisa-
tion technique was employed in cases where outliers were present. This approach modifies
the standard min-max normalisation method by addressing the disproportionate influence of extreme values on the overall score distri-
bution. In instances where a single outlier was identified, that data point was clipped from the normalisation range and assigned a score of 100, while the remaining data points were nor-
malised using the min-max formula within the adjusted range and normalised out of 90. In cas-
es where multiple outliers were detected, the highest outlier received a score of 100, the sec-
ond-highest outlier was assigned 95, and the remaining data points were again normalised out of 90. This trimmed normalisation ensures that the outliers are appropriately recognised for their exceptional values without dispropor-
tionately compressing the score range of the rest of the dataset, thereby maintaining both comparability and interpretive balance across variables.
180Investment Friendliness Index
Figure 20: Trimmed min-max technique for number of international airports/area of state
Application of trimmed min-max normalisation
Min-max normalisation Trimmed min-max normalisation
0.0
20.0
40.0
60.0
80.0
100.0
0.0
20.0
40.0
60.0
80.0
100.0
Annexures 181
Annexure 3: Perception questions to
assess investment friendliness of
states
Note: Responses rated on a scale of 1-10
• An optional feedback box was provided at the
end of each section, where the respondent
provided reasoning/feedback for his/her
score/s.
• If a question was not relevant to respondent’s experience, they had the choice to select ‘Not Applicable’
• Each respondent had the choice to rate upto
5 states
Quality of roads
1. How would you rate the quality of roads in the
state?
You may consider factors such as construction
quality and maintenance of the road to provide
your response
2. How is the road connectivity in the state?
You may consider the connectivity between
industrial hubs/office locations and ports/ highways/airports/ICDs and provide your response basis the time taken for goods
transfer/commute
Transportation infrastructure
• Which type of transportation infrastructure would you like to provide feedback on?
Sub-questions to be asked basis the option
chosen
3. How would you rate the performance of
the railway network in meeting business transportation requirements?
You may consider factors such as rail schedules,
cargo capacity, availability of rail sidings,
locomotives, wagons, rail infrastructure,
passenger commute options and transfer
facilities to provide your response
4. How would you rate the performance of
airports in meeting business transportation
requirements?
You may consider factors such as flight
schedules, proximity to your facilities, transit
times and airport infrastructure to provide
your response, assessing the overall efficiency
and cost-effectiveness of airport services
5. How would you rate the performance of
seaports in meeting business transportation
requirements?
You may consider factors such as berth
availability, cargo handling, turnaround time,
demurrage charges and port infrastructure to
provide your response
6. How would you rate the overall performance of
ICDs in meeting your business requirements?
You may consider factors such as container
handling efficiency, customs clearance
procedures, storage, demurrage charges and
warehousing facilities to provide your response
Power infrastructure
7. How reliable is the state’s industrial power
supply?
You may consider factors such as frequency
and duration of power outages and voltage
fluctuations to provide your response,
assessing the reliability of the state’s industrial
power supply in supporting uninterrupted
business operations.
Plug-and-play industrial parks
8. How would you rate the industrial park
facilities in the state?
You may consider the quality, availability
of utilities, accessibility (e.g. proximity to transportation hubs), accommodation facilities and the plug-and-play usage (e.g. ease of setting up operations) to provide your response
Storage and digital infrastructure
9. How would you rate the state’s storage
infrastructure for supporting your business’s
logistics and supply chain operations?
You may consider factors such as warehouse
capacity, grade of warehousing and location,
as well as cold chain facilities and its storage
costs to provide your response
182Investment Friendliness Index
10. How would you rate the digital infrastructure
for supporting your business operations?
You may consider factors such as internet
speed, mobile coverage and overall connectivity
experience to provide your response
Investor satisfaction with investment
promotion agencies
11. How effective is the state Investment
Promotion Agency?
You may consider factors such as, whether
they are able to aid investors, responsiveness
to inquiries, clarity and accuracy of information
provided and overall support in navigating
regulatory processes to provide your response
Workforce
12. How would you rate the availability of skilled
workforce to meet your business needs?
You may consider factors such as the
ease of finding and recruiting of workers with specialised skills, qualifications, and experience relevant to your industry or sector, to provide your response
13. How would you rate the availability of unskilled
workforce in the area, to meet your business needs?
You may consider factors such as the ease of
finding and recruiting staff across blue collar workforce to provide your response.
14. How would you rate the productivity of your
workforce?
You may consider factors such as efficiency
(ability to complete tasks with minimal waste of time and resources) and the quality of work to provide your response
15. How satisfied are you with the technical skills
and industry-relevant competencies of the workforce?
You may consider factors such as technical
skills, knowledge and understanding of industry-specific concepts, and the workforce’s proficiency in specific tools, software, and technologies to provide your response. This is with reference to the managerial/white collar workforce
Quality of life
16. How would you rate your experience with the
State’s quality of life?
You may consider factors such as availability
and quality of amenities, quality of living environment, restaurants, places for entertainment, weekend getaways and access to leisure activities to provide your response
17. How would you rate the availability of diverse
and suitable job opportunities for family
members of employees?
You may consider factors such as suitable job
opportunities available for family members
18. How would you rate the law and order situation
in the State?
You may consider factors such as crime rate,
effectiveness of law enforcement agencies, response time to emergencies and public perception of safety to provide your response
Stakeholder satisfaction score with
state policies
19. How would you rate the design and
transparency of state-level investment/
industrial policy frameworks?
You may consider factors such as clarity of
rules and regulations that govern business operations, investment in the state, and transparency referring to the ease with which policies and procedures can be understood and accessed, to provide your response.
20. How would you rate the timelines of financial
incentive disbursements from the State government?
You may consider factors such as the speed
of disbursement and consistency of payment schedules to provide your response
Satisfaction with the single window
policy
21. How would you rate the ease of use of the
single window system?
You may consider factors such as clarity of
procedures, responsiveness of the system,
and overall user experience to provide your
response
Annexures 183
22. To what extent has the single window system
reduced the time taken to complete the
investment process?
You may consider factors such as the duration
of each stage of the investment process, the number of steps required, and the overall efficiency of the system in reducing processing time, to provide your response
NOCs/Permissions to start a business
23. How would you rate the ease of obtaining all
the necessary NOCs/permissions to start a business in the state?
You may consider factors such as the number
of approvals required, the clarity of application procedures, the responsiveness of authorities, and the overall time taken to obtain necessary clearances, to provide your response
24. How competitive do you think the costs
associated with obtaining licences to start a business in the state are, compared to other states?
You may consider factors such as licence
fees, registration fees, inspection fees, and other costs, including consultancy fees, documentation costs, and fees paid to agents, to provide your response
25. How would you evaluate the state’s
performance to start a business within the timeframe defined by the state
You may consider the time taken to obtain
necessary permits, ease of registration, and reliability of the process to provide your response.
Utility connections - Electricity and water
26. How would you rate the ease of obtaining
utility connections in the state, excluding environment clearance-related matters?
You may consider factors such as time taken
to obtain connections and responsiveness of utility providers to provide your response
Land allotment and use
27. How would you rate the overall experience of
obtaining land allotment in the state?
You may consider factors such as speed,
clarity, transparency, and investor-friendliness of the process, statutory costs and associated costs to provide your response.
Statutory costs (fees and charges mandated
by the government, such as registration fees, stamp duty, and other official charges)
Associated costs (additional expenses, such
as agent fees, documentation costs and other incidental charges)
28. How would you rate the overall quality of the
state’s land use change approval process?
You may consider number of procedures
involved , time taken for approvals and availability of online application systems to provide your response
Environmental clearance
29. How would you rate the efficiency of the state’s
environmental clearance process for setting up business operations
You may consider the time taken for clearance
to provide your response
30. What is the overall experience of businesses
in obtaining environmental clearance and complying with regulations in the state?
You may consider how cumbersome the entire
procedure is in terms of the documentation, associated costs (statutory and others) to provide your response
Ease of exit
Closing the operations of a plant/company in any state
31. How effective is the state’s regulatory
framework in allowing businesses to cease operations in a smooth and timely manner?
You may consider clarity of regulations, time
taken to complete closure procedures and administrative complexity involved in closing the operations of a plant/company in the state
32. How reasonable do you think the costs
associated with closing a business are in the state?
You may consider regulatory costs such as
statutory fees, legal and associated costs
184Investment Friendliness Index
(additional expenses, such as agent fees,
documentation costs, and other incidental
charges), and any penalties associated with
business closure
Construction permits
33. How is the complexity and transparency of the
state’s construction permit process?
You may consider number of procedures
involved, time taken for approvals and availability of online application systems to provide your response
Ease of contract enforcement and
access to dedicated commercial courts
34. How would you rate the accessibility of
the state’s commercial courts for resolving
commercial contract related disputes?
You may consider procedural simplicity as
well as availability of digital filing systems to assess accessibility of the commercial courts
35. How would you rate the overall effectiveness
of the legal system in enforcing commercial contracts in the state?
You may consider timeliness and reliability
of the legal system in its ability to enforce commercial contracts only. Scoring should not cover aspects related to labour disputes and tax disputes
Severity of labour disruptions
36. How would you rate the impact of labour
disruptions such as strikes on the operational stability and productivity of businesses in the state
You may consider the frequency and duration
of labour disruptions, such as strikes, and their effect on operational stability, productivity, and overall business continuity to provide your response
37. How would you rate the ease of complying
with existing labour laws and regulations in the state?
You may consider clarity of labour regulations,
ease in meeting the labour laws, administrative burden and extent of support offered by state authorities in resolving labour disputes
Regulatory environment
38. What is your experience with the regulatory
environment in the state, including the role of factory inspectors and other government agencies?
You may consider the frequency of inspections
and ease of compliance to provide your response
Consistency in state policies
39. How would you rate the consistency and
stability of the state’s policies and regulations in supporting predictable and reliable business operations
You may consider the frequency of changes
and enforcement consistency to provide your response
Grievance redressal mechanism in the
state
40. How would you rate the state’s grievance
redressal mechanism in addressing business-
related complaints or disputes?
You may consider effectiveness of the
grievance redressal mechanism of the state and the time taken in settling grievances
Disaster preparedness of the State
41. How would you rate the disaster preparedness of the State towards natural or manmade disasters?
You may consider the State’s ability to identify
risks/disasters, communicate with businesses and stakeholders and mitigate them, ensuring business continuity to assess disaster preparedness
Annexures
185
Notes
186Investment Friendliness Index
Notes
187Investment
Friendliness
Index
188Investment Friendliness Index
Friendliness
Index
2026
Investment Friendliness Index
Disclaimer
Crisil has received financial assistance under the Research Scheme of NITI Aayog (RSNA) to prepare this
report. While due care has been exercised to prepare this report using data from various sources, NITI Aayog
does not confirm the authenticity of data and accuracy of the methodology used for research and preparation
of this report. NITI Aayog shall not be held responsible for findings or opinions expressed in this document.
That responsibility rests completely with Crisil.
Investment
Friendliness
Index
3 July 2026
4Investment Friendliness Index
Message from the Vice Chairman
Ashok Kumar Lahiri
Vice Chairman, NITI Aayog
India today stands at a pivotal moment in its development
journey. Over the past three decades, sustained economic
reforms have transformed the country into one of the world’s
fastest-growing major economies. 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.
Achieving this ambition will require a significant acceleration
in investments that expand productive capacity, strengthen
manufacturing, create quality employment and foster
innovation.
History demonstrates that nations have achieved
developed economy status with sustained investment-led
growth. Investment serves as the foundation of economic
transformation by creating productive assets, modernising
infrastructure, enabling technological advancement and
improving competitiveness. It facilitates the movement
of labour towards more productive sectors, strengthens
supply chains and enhances the efficiency of markets. Most
importantly, sustained investment creates the conditions
necessary for higher incomes, greater exports and long-term
prosperity.
Message 5
For India, manufacturing occupies a central place in this transformation. A vibrant
manufacturing sector generates large-scale employment, supports innovation,
deepens domestic value chains and enhances the country’s integration with global
production networks. Manufacturing also creates strong multiplier effects across
logistics, infrastructure, services, research and skill development. As global supply
chains undergo structural realignment, India has a unique opportunity to emerge as
a preferred destination for investment-led manufacturing. Realising this opportunity
requires an enabling ecosystem that inspires confidence among domestic and
international investors alike.
While the Government of India has undertaken significant reforms to improve the
national investment climate, the next phase of India’s growth will increasingly
be shaped by the competitiveness of its states and Union Territories. Investors
ultimately make location-specific decisions based on factors such as infrastructure
quality, regulatory certainty, institutional effectiveness, availability of skilled human
resources, logistics efficiency, financial stability, and the ease of establishing and
operating businesses.
States therefore occupy the forefront of India’s investment story, and strengthening
their investment ecosystems will be critical to achieving the national vision of
becoming a developed economy by 2047.
It is in this context that NITI Aayog has developed the Investment Friendliness
Index (IFI). The index has been conceived as a comprehensive and evidence-based
framework to assess the readiness of states and Union Territories to attract, facilitate
6Investment Friendliness Index
and sustain investments. More than a comparative ranking, the IFI is intended to
serve as a strategic reform instrument that enables governments to benchmark
performance, identify policy gaps, learn from best practices and undertake
continuous institutional improvement. By fostering healthy competition
alongside cooperative federalism, the index seeks to accelerate reforms that
strengthen India’s overall investment ecosystem.
The report is founded upon a rigorous research methodology that combines
quantitative indicators with extensive stakeholder engagement. The framework
has been developed following detailed consultations with central ministries,
state governments, industry associations, multilateral institutions, regulatory
bodies, investors, financial institutions, consulting organisations, export
promotion councils and subject matter experts. Their insights have helped shape
an assessment framework that reflects both policy intent and the practical
experiences of investors operating across diverse sectors and geographies.
The Investment Friendliness Index is intended to serve multiple stakeholders.
For policymakers, it offers a structured roadmap for prioritising reforms
and monitoring progress over time. For investors, it provides a transparent,
comparable and evidence-based assessment of investment conditions across
states and Union Territories, thereby reducing information asymmetry and
supporting informed investment decisions.
For researchers and development practitioners, it offers an analytical framework
for understanding the institutional determinants of investment competitiveness.
India’s aspiration to become a developed nation by 2047 will ultimately depend
Message 7
on its ability to mobilise productive investment at an unprecedented scale. Such
investment will not only expand manufacturing and industrial capacity but also
accelerate innovation, strengthen exports, generate quality employment and improve
living standards for millions of citizens. By helping states continuously strengthen
their investment ecosystems, the Investment Friendliness Index seeks to contribute
meaningfully towards this national endeavour.
I am confident that this report will serve as a valuable reference for governments,
investors, industry and researchers alike. More importantly, I hope it will inspire a
new generation of reforms that enhance India’s competitiveness, deepen cooperative
federalism and reinforce the country’s position as one of the world’s most attractive
investment destinations. Together, these efforts will strengthen the foundations of
a globally competitive manufacturing sector and help transform the vision of Viksit
Bharat @2047 into reality.
8Investment Friendliness Index
Message from the
former Vice Chairman
Suman Bery
Former Vice Chairman, NITI Aayog
Hon’ble Prime Minister during the 9th Governing Council
meeting of NITI Aayog emphasized the need for an Investment
Friendly Charter, which could involve modifying laws and
reforms related to clearances, licensing, and ensuring the
availability of land through land banks, electricity, and water,
as well as offering appropriate incentives and support to
attract investments.
In light of this guidance from the Hon’ble Prime Minister, an Investment Friendliness Index has been created to provide a structured approach for assessing and strengthening the investment reception of States. The index is designed to recognize individual strengths, identify areas that require improvement, and to encourage healthy and constructive competition among States. Through this approach, it supports state governments in consistently enhancing their investment ecosystems in line with evolving economic opportunities.
The Report titled “Investment Friendliness Index” for
States is intended to serve as a guiding document for the
domestic and global investor communities. It provides a
clear and accessible reference on the strengths and areas
for improvement of each State and Union Territory, enabling
investors to make informed decisions and supporting the
flow of investment in these regions.
Message 9
This index has been developed with the objective of offering a comprehensive
assessment of how effectively States foster an environment that supports
investment. It provides a robust and data-driven mechanism for evaluating the
extent to which States are able to aid, attract, and sustain investment activity.
The Index evaluates States on their performance across key pillars, including
business climate, institutional environment, financial health and infrastructure.
These pillars collectively comprise eighty-four indicators across eight broad areas.
A dynamic and supportive investment environment across States is essential for
accelerating India’s economic transformation. At the same time, it is important that
States balance economic ambition with administrative efficiency by attracting new
enterprises and capital while ensuring a regulatory environment that is reliable,
predictable and supportive of business activity.
The design and development of the Index has benefited from extensive consultations.
The insights and feedback of industry associations, multilateral institutions, Central
and State Governments, regulatory bodies, export promotion councils, consulting
firms, investment banks, private equity and venture capital firms, and sovereign
wealth funds have been fully incorporated.
The Index and accompanying report constitute an important step towards
measuring, assessing, and tracking foreign investment across India’s states through
a transparent and objective set of indicators and pillars. They are intended to
support policy makers and investors alike in advancing India’s long-term investment
and development goals.
10Investment Friendliness Index
Message from the former Member
Dr Arvind Virmani
Former Member, NITI Aayog
India’s investment landscape is evolving rapidly, with States
emerging as drivers of the country’s economic dynamism.
State governments today play an increasingly influential
role in shaping the business climate through their policies,
institutions and administrative practices. Their decisions
have a direct bearing on entrepreneurial activity, industrial
expansion, job creation, and the ability to integrate into both
domestic and global value chains. Strengthening State-level
investment ecosystems, job skilling and education quality
is therefore crucial for sustaining high growth and ensuring
that the benefits of development are widely shared.
One of the central challenges in investment promotion is
achieving the right balance between economic ambition
and operational efficiency. While States compete to attract
new enterprises and capital, it is equally important that the
regulatory environment remains reliable and predictable.
A supportive investment environment cannot rely solely on
incentives; it must rest on transparency, responsiveness, and
a long-term commitment to reducing friction for businesses.
A stable, investor-friendly ecosystem not only draws fresh
investment but also encourages reinvestment by existing
firms, which is a strong indicator of confidence in governance
and institutions.
Message 11
In recent years, many States have taken noteworthy steps to strengthen
their investment architecture, including digital reforms for approvals
and clearances, improvements in logistics and connectivity, and the
creation of specialised agencies and facilitation cells. At the same
time, the pace and depth of progress differ across States, making it
valuable to document learnings and highlight effective practices that
can be emulated.
The Investment Friendliness Index (IFI) has been developed with this
intent. It provides a comprehensive, data-driven charter to evaluate
how effectively States enable and support investment. By examining a
wide spectrum of indicators, both quantitative and qualitative, through
surveys, the IFI offers objective insights into the functioning of State-
level investment ecosystems.
Ultimately, the IFI and this report shall serve as a guide to investors
looking to invest in Indian States and Union Territories, while ensuring
that States are able to track their performance in attracting foreign
investment and take measures to improve the same.
12Investment Friendliness Index
Message from the former CEO
B. V. R. Subrahmanyam
Former CEO, NITI Aayog
India’s economic progress over the last decade has been both
decisive and transformative. The country has successfully
steered its development journey through prudent
policymaking, strategic infrastructure expansion, and a
steadfast commitment to long-term sustainability. These
efforts have strengthened the foundations of our economy
and positioned India as one of the world’s most dynamic
investment destinations. As the nation advances toward
the goal of Viksit Bharat 2047, outlined by Hon’ble Prime
Minister, maintaining strong and steady investment flows
will be essential to realising our shared national aspirations.
Investment plays a uniquely powerful role in shaping
economic outcomes due to its far-reaching multiplier
effects. A single investment unlocks value across multiple
layers, creating employment, generating demand for goods
and services, strengthening supply chains and stimulating
innovation ecosystems. As capital flows into high-potential
sectors such as infrastructure, manufacturing, digital
services, energy transition and R&D, it directly contributes
to increased productivity and improves the standard of living
for millions. The pathway to a prosperous and future-ready
India is therefore closely intertwined with the country’s
ability to consistently attract, retain and scale investments.
India’s investment environment has undergone significant
improvement in recent years. Encouragingly, both domestic
Message 13
and international investors have responded by committing resources across emerging
and traditional sectors alike.
While national-level interventions have significantly strengthened investor confidence,
States remain at the core of India’s growth story. Recognising the pivotal role of States
in accelerating the nation’s development, the concept of Viksit Rajya has emerged as
an essential pillar of the Viksit Bharat vision. Each State contributes distinct strengths,
priorities, and opportunities, shaping the national growth mosaic. Empowering States to
enhance competitiveness, attract capital, and accelerate industrial and innovation-led
growth will be key to realising the full economic potential of the country. Hon’ble Prime
Minister has repeatedly underlined the role of States in promoting investment and had
given a call to develop an Investment Friendliness Index.
The Investment Friendliness Index (IFI) has been developed with the purpose of
providing a comprehensive assessment of how effectively States foster an investment-
supportive environment. The index evaluates States based on their performance in key
areas, including infrastructure, business climate, both natural and human resources,
government incentives, regulatory ease, institutional environment, financial health and
environment resilience. The assessment is conducted not only using data from secondary
sources but also through surveys from relevant private sector stakeholders to capture
the true on-the-ground picture of each State. This report is a comprehensive analysis of
strengths and relative challenges of each State and UT.
I am confident that this report will empower States and UTs to formulate policies and
strategies for attracting further investments and will lead them on the path to Viksit
Bharat to achieve designated milestones.
14Investment Friendliness Index
Message from the
Programme Director
Ishtiyaque Ahmed
Programme Director – Industry and
Foreign Investment, NITI Aayog
India’s economic progress over the past decade has
been remarkable, positioning the nation among the most
attractive destinations for global investors. As India aims to
achieve its long-term growth objectives, the ability to attract
stable and diversified investments will play a decisive role.
The country’s investment climate has benefited significantly
from technology adoption, policy reforms, and infrastructure
expansion. Yet, the varying pace of improvements across
States underscores the need for a structured assessment of
State-level investment readiness.
The Investment Friendliness Index has been developed
against this backdrop. Over the last five years, India has
seen substantial gains in its digital infrastructure, logistics
development, and sector-specific incentives. At the same
time, investors continue to highlight challenges related to
approval timelines, land access and the availability of skilled
labour in high-value sectors. A systematic index therefore
becomes essential for understanding both the progress and
the gaps. States that have improved investment facilitation
mechanisms, such as single-window clearance systems,
dedicated investor grievance redressal units and plug-
and-play industrial facilities have reported higher capital
commitments and improved project execution speed. These
outcomes demonstrate that institutional responsiveness is
just as important as industrial capacity.
Message 15
The Investment Friendliness Index provides a data-backed lens to understand how
each State is positioned in this evolving landscape. By identifying comparative
strengths and areas requiring attention, the index complements national efforts
to foster regionally balanced growth. It is expected that the insights presented in
this report will support governments, industry associations and investors in making
informed strategic decisions and in aligning resources toward productive outcomes.
The Index and the report shall ultimately serve as an important metric for measuring
Indian States’ capability to attract foreign investment which will allow States and
UTs to develop frameworks and strategies for increasing investments and becoming
investor friendly regions globally.
The work carried out in the index underscores our shared resolve to promote
conducive business environments across India and ensure that the country’s growth
journey remains inclusive, competitive and resilient.
16Investment Friendliness Index
The development of the Investment Friendliness
Index for States was supported by an Advisory
Committee which provided strategic guidance
throughout the design and conceptualization
of the Index, contributing to indicator selection,
methodological refinements, and ensuring
alignment with investor perspectives and state-
level economic priorities.
The following section highlights the composition,
background and expertise of the Advisory
Committee members:
Shri Pravin Srivastava, Indian Statistical Service
(Retd.)
Shri Pravin Srivastava, a 1983-batch officer
of the Indian Statistical Service, served as the
Chief Statistician of India and Secretary, Ministry
of Statistics and Programme Implementation
(MoS&PI).
Shri Ashish Kumar, Indian Statistical Service
(Retd.)
A 1977-batch officer of the Indian Statistical
Service, Mr. Kumar served as Director of the UN
Statistical Institute for Asia and the Pacific, he is
also President of the Center of Data for Economic
Development and Chief Statistician at Pahle India
Foundation, New Delhi.
Dr. Shri Laveesh Bhandari, President CSEP
Dr. Laveesh Bhandari is President at the Centre for
Social and Economic Progress (CSEP). Dr Bhandari
has published widely on subjects related to
sustainable livelihoods, industrial, economic, and
social reforms in India, economic geography, and
financial inclusion.
Shri Dhrijesh Kumar Tiwari, ISS
Shri Dhrijesh Kumar Tiwari is an Indian Statistical
Service Officer of 1998 Batch. He is a Post
Graduate in Statistics. Currently, he is working
as Joint Secretary, Development Monitoring and
Evaluation Office (DMEO), NITI Aayog.
Shri Upendra Kumar Gupta, NITI Aayog
Shri Upendra Kumar Gupta is serving as a Deputy
Adviser (Industry and Foreign Investment) at NITI
Aayog where he has been associated for over 12
years.
The committee’s contributions were instrumental
in:
• Shortlisting indicators to ensure comprehen- sive yet focused coverage of key drivers of investment friendliness.
• Refining the pillar structure and weightages, providing analytical balance and methodolog- ical clarity.
• Recommending statistical tests and validation techniques that enhanced the rigor, credibility, and practical applicability of the Index.
• Sharing field-based perspectives and nuanced insights, which encouraged the team to think in new directions and incorporate aspects that reflect actual investor concerns.
We extend our sincere gratitude to the esteemed members of the Advisory Committee for their invaluable guidance, constructive insights, and continuous support during the development of this Index. With their profound expertise and extensive experience, they significantly enhanced the index’s robustness and relevance.
We deeply appreciate the time, effort, and
thoughtful deliberations the committee invested
across multiple rounds of review and discussion.
Their guidance significantly shaped the quality of
this work and ensured that the index stands on
strong analytical foundations.
Investment Friendliness Index
Advisory Committee
16
Message 17
Hon’ble Prime Minister during 9th Governing
Council meeting, encouraged States to provide
an investor-friendly environment and tasked
NITI Aayog to prepare an ‘Investment-friendly
Charter’ of parameters which would include
policies, programmes and processes to be put in
place for attracting investments. Subsequently,
during Union Budget for fiscal 2026, preparation of
Investment Friendliness Index was announced to
further the spirit of competitive and cooperative
federalism.
The Report on Investment Friendliness Index
is a collective effort. I am grateful to Hon’ble
Vice Chairman, NITI Aayog for his insights and
leadership anchoring this project. I am thankful
to Dr. Arvind Virmani, Hon’ble former Member,
NITI Aayog for giving his valued suggestions for
the preparation of this report. Observations and
guidance of CEO, NITI Aayog from time to time has
been of immense value in the culmination of the
report. I thank the senior leadership of NITI Aayog
for providing necessary directions for this project.
Support extended by Shri Amardeep Singh Bhatia,
Secretary, DPIIT, Ms. Himani Pande, Additional
Secretary, DPIIT and Shri Bhuvnesh Pratap Singh,
Deputy Secretary, DPIIT is acknowledged with
gratitude. Nielsen, our survey agency engaged
by DPIIT needs to be credited for conducting the
physical survey in a proper and time-bound manner.
The team from Nielsen under the guidance of DPIIT
has been instrumental in collecting relevant data
from the field across States and UTs.
This exercise involved rigorous analysis and
identification of indicators from various sources.
Those indicators were then analysed and finally
an exhaustive list of around 953 indicators was
compiled. In this regard, the efforts of internal
Sub- Groups led by Ms. Neha Nautiyal, Shri
Shoyab Ahmed Kalal, Shri Manoj Kumar Upadhyay,
Shri Harshit Mishra and Shri Abhishek Agarwal
respectively need special mention.
Advisory Committee chaired by Shri Pravin
Srivastava, Former Secretary, MoSPI included
Shri Ashish Kumar, Former, DG, CSO, Shri Laveesh
Bhandari, President & Senior Fellow, CSEP and Shri
Dhrijesh Tiwari, Joint Secretary, DMEO as members
and Shri Upendra Kumar Gupta as member-
secretary. This Committee provided guidance on
the entire statistical framework which included
identification of relevant indicators, method of
survey, sample size, design of questionnaire for
survey and interpretation of final outcomes. Their
contributions have helped immensely to give this
report its present shape.
Crisil has been the knowledge partner for this
project. The team from Crisil particularly Mr.
Pushan Sharma, Mr. Mohit Adnani, Mr. Jyotish
Menon and Mr. Nishaan Patel supported NITI Aayog
and helped in navigating complexities associated
with this project.
Finally, this endeavour would not have been
possible without the efforts of the team from
Industry & Foreign Investment Division. Since the
inception of this project, the efforts of the team
led by Shri Abhishek Mukherjee and comprising of
Shri Bhadraksh Bhargav, Ms. Pragya Bajpai, Shri
Shahid Qayoom, Shri Karun Gupta and Ms. Vrushali
Lokhande are acknowledged.
Acknowledgement
Ishtiyaque Ahmed
Programme Director (Industry & Foreign Investment)
NITI Aayog
17
18Investment Friendliness Index
Investment Friendliness Index
List of abbreviations used in the report
AQI Air Quality Index
Bcm Billion cubic metre
CFS Container freight stations
EOUs Export-oriented units
FDI Foreign direct investment
FY Financial year
GDP Gross domestic product
GII Global Innovation Index
GSDP Gross state domestic product
GSPI Global Soft Power Index
GST Goods and services tax
GVA Gross value added
IBC Insolvency and Bankruptcy Code
ICD Inland container depot
ICOR Incremental capital-output ratio
IILB India Industrial Land Bank
IMF International Monetary Fund
ITI Industrial Training Institute
MoU Memorandum of understanding
MSMEs Micro, small and medium enterprises
NCAER National Council of Applied Economic Research
NIMZs National Investment and Manufacturing Zones
NIRF National Institutional Ranking Framework
PCA Principal component analysis
PE Private equity
PLI Production Linked Incentive
POL Petrol, oil and lubricants
R&D Research and development
RBI Reserve Bank of India
18
Message 19
SEZs Special Economic Zones
STEM Science, technology, engineering and mathematics
T&D Transmission and distribution
USD United States dollar
UTs Union territories
VC Venture capital
WIPO World Intellectual Property Organization
List of figures
Figure 1:
India’s GDP and investment trajectory in the past 30 years 26
Figure 2: Roadmap 31
Figure 3: Eight pillars comprising the Investment Friendliness Index 32
Figure 4: Process followed for indicator selection/rejection 33
Figure 5: Stakeholders 34
Figure 6: Stakeholder feedback 34
Figure 7: Pillar weights 35
Figure 8: Indicators by priority 36
Figure 9: Framework 37
Figure 10: Geographical distribution of responses 41
Figure 11: Categorisation of respondents based on revenue size 42
Figure 12: Distribution of respondents across industries 42
Figure 13: State profile 44
Figure 14: Performance of states on overall Investment Friendliness Index 47
Figure 15: Performance of large states 49
Figure 16: Performance of hilly and northeastern states 51
Figure 17: Performance of Union Territories and City States 53
Figure 18: Performance of states on Investment Friendliness Index 64
Figure 19: Scoring methodology for secondary indicators 179
Figure 20: Trimmed min-max technique for number of international airports/area of state 180
19
Investment Friendliness Index
List of tables
Table 1: State categorisation 43
Table 2: Rank and score of states on Investment Friendliness Index 65
Table 3: List of indicators – Infrastructure 174
Table 4: List of indicators – Business climate 175
Table 5: List of indicators – Resources 176
Table 6: List of indicators – Government policy 177
Table 7: List of indicators – Regulatory ease 177
Table 8: List of indicators – Financial health 177
Table 9: List of indicators – Institutional environment 178
Table 10: List of indicators – Environment resilience 178
20
Contents
22
25
31
47Executive summary
Chapter 1:
Introduction
Chapter 2:
Approach and methodology
for index preparation
Chapter 3:
Results
69
Chapter 4:
State profiles
67Conclusion
174Annexures
22Investment Friendliness Index
Executive summary
22
India has clocked robust economic growth over the
past three decades, with gross domestic product
(GDP) growing an average 6.1% in real terms
over fiscals 1992 to 2025. As the country strives
to achieve the vision of Viksit Bharat by 2047,
which emphasises self-reliance, innovation and
citizen empowerment, growth needs to surpass
the historical rate amid a challenging global
landscape marked by increasing protectionism.
Achieving this ambitious goal will require a
significant increase in India’s investment rate.
According to the World Bank, for India to become
a high-income economy by 2047, the country
must achieve an average real GDP growth of 7.8%
over the next two decades. Notably, investments
have accounted for over half of the growth
seen since fiscal 1992, riding on the landmark
economic reforms of the early 1990s. A sustained
acceleration in investments will be crucial from
here. While central reforms provide the framework
for this vision, state-level initiatives will be vital
in attracting private investments by enhancing
ease of doing business, improving infrastructure
and ensuring policy predictability.
The Investment Friendliness Index has been
developed to understand how well Indian states
are positioned to attract investments. The index
covers all 28 states and eight union territories
(UTs) and evaluates what makes a state
attractive for investors, as well as the challenges
investors face. The index focuses on eight pillars:
infrastructure, business climate, resources,
government policy, regulatory ease, institutional
environment, financial health and environment
resilience.
Formulation of the index began with a
thorough review of the secondary literature
to evaluate existing frameworks that assess
a state’s investment attractiveness. Then, key
factors influencing investment decisions were
identified and organised into broad pillars, with
relevant parameters defined to capture specific
performance areas. To ensure a comprehensive
perspective from the investor’s viewpoint, an
exhaustive list of 953 indicators were compiled
across eight critical pillars. The next phase
focused on refining the list of indicators based on
their significance within the pillars, emphasising
those that directly influence decision-making and
risk assessment. Key metrics included relevance,
importance, measurability and availability. Each
indicator was assessed to gauge its capacity
for quantitative or qualitative evaluation, with
reliable and current data being essential for
accurate representation.
The framework was enhanced through top-
down and bottom-up approaches, resulting in
a streamlined set of indicators. The final pillar
weights were established based on discussions
with Advisory Committee and stakeholders. The
committee offered strategic direction by shaping
indicator selection, refining the index structure
and weightages, and recommending statistical
tests, thereby ensuring the Index’s credibility and
practical relevance. Inputs from 165 stakeholders
across various sectors were incorporated to
ensure the framework reflected ground realities
and prioritised investor concerns.
The index uses a 100-point scale and serves as a
benchmark for states to improve their investment
environment. Each state was scored on different
aspects using a mix of primary surveys and
publicly available data. Major participants in
the survey spanned across key sectors in India.
Based on the scores, states were grouped into
four categories: Top performers, frontrunners,
emerging performers and aspiring states. Five
Investment Friendliness Index
Introduction 23 23
states were identified as top performers: Gujarat,
Maharashtra, Tamil Nadu, Goa and Odisha. Fifteen
states were classified as frontrunners, including
Delhi, Uttar Pradesh and Andhra Pradesh. Eight
states/UTs fell into the emerging performers
category, while an equal number fell into the aspiring
states category.
To ensure the comparison between diverse states
is meaningful, the assessment also groups them
into three geographical categories: large states,
hilly and northeastern states, and city states and
UTs. This approach helps account for structural and
contextual differences. Among large states, Gujarat
is the best performer, followed by Maharashtra and
Tamil Nadu. Among hilly and northeastern states,
Uttarakhand, Assam and Himachal Pradesh are the
leading performers, with others showing moderate
scores in the mid-30s to mid-40s band. Among city
states and UTs, Goa, Delhi and Chandigarh stand out
on top.
Gujarat tops the list with a score of 56.6, based
on its efficient port operations and competitive
power sector that ensures reliable electricity and a
favourable business climate. Maharashtra follows
closely with a score of 53.7, excelling in attracting
significant private equity/venture capital (PE/VC)
investments, along with the highest number of Atal
Tinkering Labs (ATLs), supported by strong economic
indicators. Tamil Nadu, with a score of 53.3, ranks
high in both infrastructure and business climate,
driven by efficient port operations, a near 100%
memorandum of understanding (MoU) conversion
rate and impressive export performance.
The detailed state profiles included in the report
will provide investors and states with a better
understanding of the scores. These profiles present
a snapshot of key macro-economic indicators for the
state, highlight the state’s key industries and provide
a detailed view of a state’s performance, highlighting
what is working well, the indicators that are driving
the scores, and how each state compares with the
top performer and average score across different
pillars.
Additionally, the state profiles capture voices from the
ground, which are perspectives shared by over 1,850
investors spoken to as part of the primary research.
Feedback from investors helps identify aspects
about a state that they appreciate as well as areas
that need improvement. These profiles will enable
states to learn from one another and implement best
practices to enhance their investment attractiveness.
Ultimately, the Investment Friendliness Index aims
to encourage collaboration and informed decision-
making. By acting on the insights from this index,
states can foster a healthier business environment,
thereby attracting more capital. This can enable
stronger economic growth across states, percolate
capital and, thereby, development across regions,
strengthen investment attractiveness, and spur
meaningful steps towards realising the Viksit Bharat
vision.
24Investment Friendliness Index
Introduction
25
Chapter 1:
Introduction
1.1 Investing for the next leg of growth
India has achieved healthy economic expansion over the past three
decades, with its GDP growth averaging 6.1% in real terms between
fiscals 1992 and 2025.
The run-up has been even stronger in recent past.
In the decade before the Covid-19 pandemic, GDP growth averaged
6.6%. After the pandemic, the pace exceeded expectations, partly
because of the low base of fiscal 2021 and partly because of the
government’s emphasis on boosting infrastructure investments
through budgetary spending.
This helped India remain one of the fastest-growing large economies.
The Hon’ble Prime Minister had, in his 2025 Independence Day
speech
1
, outlined the vision of Viksit Bharat by 2047, focussing on self-
reliance, innovation and citizen empowerment. The government is now
preparing the roadmap for it to mark the 100 years of Independence.
1
Press Information Bureau of India, Prime Minister’s Office (2025). ‘PM Modi’s 79th I-Day Address:
A Vision for a Viksit Bharat 2047’.
26Investment Friendliness Index
Note: Investment growth is based on gross fixed capital formation; growth is in real terms
Source: National Statistics Office
To achieve that goal, the growth line needs to rise
well above past trajectories.
And this must happen even as the global landscape
is becoming more challenging. Major economies are
shifting towards protectionism, contrasting with
previous decades that emphasised lowering trade
barriers and enhancing globalisation.
In this context, activating domestic growth
drivers and relentlessly removing bottlenecks in
the economy, as well as easing the way of doing
business, are crucial.
Here, raising India’s investment rate becomes
paramount.
To be sure, investments have been a critical driver of
growth since the seminal reforms of the early 1990s.
The chart below shows how India’s GDP growth is
positively correlated with increasing investments in
the past 30 years.
Figure 1: India’s GDP and investment trajectory in the past 30 years
1.2 The role of investments in growth
Long-term growth is driven by capital (built through investments), labour and productivity.
Using a growth accounting framework developed by
the Nobel Prize-winning economist Robert Solow to
analyse the drivers of growth in India highlights the
importance of investments or capital.
Capital has been the primary driver of growth since
the economic reforms of 1991. It accounts for a
little over half of the growth seen since fiscal 1992,
according to the KLEMS (acronym for capital, labour,
energy, materials and services) database published
by the Reserve Bank of India (RBI).
The next biggest contributor to growth has been
gains in productivity from improved connectivity,
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
-10.0 -5.0 0.0 5.0 10.0 15.0 20.0 25.0
GDP growth (%)
Investment growth (%)
Introduction 27
the digitisation and digitalisation reforms, and
improvement in processes.
A World Bank 2025 report
2
estimates capital
deepening and high productivity growth contributed
the most to overall GDP growth in India between
calendar years 2000 and 2019.
Capital has been the key driver of post-pandemic
growth as well. The central government’s
infrastructure push via budgetary capital
expenditure (capex) has led to strong gross fixed
capital formation (GFCF) growth. The central
government increased its capex to 2.9% of GDP on
average between fiscals 2022 and 2025, compared
with 1.7% pre-pandemic (average for fiscals 2016-
2020)
Investments are crucial to India’s growth. The World
Bank estimates that India needs to grow 7.8% on
average in real terms over the next two decades
to become a high-income economy by 2047—the
central goal of Viksit Bharat. For this, the share of
investments in GDP should rise by next decade.
According to the World Bank, countries which
transitioned to a high-income status followed
similar trajectories where investment and growth
surges coincided, but the share of investments in
GDP declined once the country crossed a certain
high threshold level of per capita GDP. Therefore,
for India’s growth to accelerate, a sustained
acceleration in investments will be crucial in its
current stage of growth.
1.3 How investments deliver multiplier
effects
Investments stimulate growth by enhancing the
productive capacity of the economy. Investments
could be in physical assets (machinery, production
lines, roads and other infrastructure), in
technological processes (driving innovation and
better use of capital) or in human capital (building
a skilled and educated workforce). Alongside a
robust institutional framework, political stability
and supportive policies bring resilience and
sustainability to economic growth.
The Economic Survey 2022-23 estimated that
economic output can increase by at least four times
the amount of capex incurred
3
.
The significance of investments in sustaining high
growth is evident from the experiences of successful
East Asian economies (refer to Box 1).
The government has been taking a similar approach
to these economies, actively investing in rural roads,
highways, airports and railways to improve physical
connectivity, reduce logistics costs and enhance
competitiveness. This kind of investment was
crucial in fostering growth in East Asian economies.
2
World Bank. 2025. India Country Economic Memorandum: Becoming a High-income Economy in a Generation. © World Bank.
3
This is based on capex multiplier estimates by (1) NIPFP (2014). Fiscal Multipliers of India and RBI (2013). Size of Government Expenditure Multipliers in India: A
Structural VAR Analysis. RBI Working Paper series
Box 1: Pivotal role of investments in East Asian success
Japan’s sustained growth after World War II was driven by a significant rise in investments, with
the investment rate increasing from 26.7% in 1950-55 to 42.6% by 1973
4
. These investments,
particularly in infrastructure, reduced logistics costs and supported manufacturing activity, leading to annual GDP growth exceeding 10% during 1955-60. This investment surge fostered a cycle of capital deepening, increased worker productivity and attracted foreign technology, establishing Japan as a global manufacturing leader by the 1970s.
28Investment Friendliness Index
1.4 Improving investment environment
India’s investments picked up pace after the pandemic,
growing faster than GDP since fiscal 2022. Investments
stood at 29.9% of GDP in fiscal 2025, a tad higher than
the decadal average of 29.1%.
The government and households have been the primary
drivers of investment growth in the post-pandemic
period. Investments by government and public sector
enterprises together grew 13.9% (in real terms) between
fiscals 2022 and 2024 (as per latest data available),
followed by household capex (through real estate)
at 13.4%. Private capex growth was slower at 8.7%.
Although uneven, private investment growth has
improved, albeit at a slower rate compared with
government and household investments. With strong
balance sheets, corporations are well-positioned to take
over the investment momentum from the government,
aided by the Production Linked Incentive (PLI) scheme.
Furthermore, the government is making steady progress
in enhancing the investment environment through
deregulation and the recent implementation of long-
awaited labour reforms, which consolidate 29 labour
laws into four codes.
As private corporate investments play a larger role and
the government aims to persist with infrastructure
development, though in a more selective manner,
capital will continue to be a crucial factor in India’s
growth trajectory.
At this stage, equal participation from states is needed
to improve the investment environment.
1.5 State-level initiatives: The key to
unlocking private investments
While central reforms set the direction for the Viksit
Bharat vision, private investors ultimately decide
where to put their money based on state-level ease
of doing business, infrastructure quality and policy
predictability. States are not just implementers, they
are active competitors for private capital, and evidence
shows that proactive states capture a disproportionately
large share of investments.
South Korea transitioned from a low-income, agrarian economy in the 1960s to an industrial
powerhouse by 1990, with the investment-to-GDP ratio rising from 10.5% in 1960 to 41.2% by
1991. State-directed investments focused on sectors such as electronics and shipbuilding,
boosting export capacity and employment. Infrastructure investments enhanced transport
efficiency, supporting regional growth and elevating South Korea to high-income status within
three decades.
China’s growth since its economic reforms in 1978 was primarily investment-driven. The
investment share in GDP rose from 34.5% in 1980 to 43.5% by 1993, resulting in China achieving
double-digit GDP growth by early 1990s. The investment rate sustained above 40% in the early
2000s, helping China become a global manufacturing powerhouse. Investments were also the
key driver of China’s economic recovery after the 2008 financial crisis, with the investment rate
peaking at 46.3% in 2011, driven by an infrastructure boom. This helped China achieve double-
digit GDP growth (until 2010), transforming it into the world’s second-largest economy.
4
Investment rate and GDP growth data is sourced from the World Bank database. For Japan, data before 1970 is not available on the World Bank database. Older
data for Japan’s investment ratio and GDP growth is sourced from research paper: Komiya, R (1966). Japan: “Foreign Tax Policies and Economic Growth”. National
Bureau of Economic Research and The Brookings Institution
Introduction 29
States drive the investment race
The top five states—Maharashtra, Karnataka, Gujarat,
Delhi and Tamil Nadu—attract ~85% of total foreign
direct investment (FDI) inflows. In contrast, states in the
northeast receive less than 1% combined, highlighting
the widening regional divergence.
Why reforms at the state level matter for private
capital investment flow
The incentives and policies of a state are critical in shaping
the investment decisions of companies. These are:
Land and labour: Private investors repeatedly
cite land availability, labour law flexibility and power reliability—all under state
control—as the top three factors dictating
their investment decision
Speed of clearances: States that have
implemented single-window systems have
cut approval times to under 30–60 days
from 6–18 months, making those preferred
investment destinations
Incentive competition: Leading states offering
customised packages (capital subsidies, power tariffs, state goods and services tax reimbursement) can swing where a Rs 10,000-crore project is set up. Gujarat’s semiconductor policy and Tamil Nadu’s electric vehicle policy are prime examples that directly influenced investments by Samsung, Tata Group and Foxconn
Infrastructure readiness: Private players
follow where roads, ports, power and industrial
corridors already exist, or are under fast-
track development (e.g., Gujarat’s GIFT City,
Maharashtra’s Samruddhi Corridor and
Karnataka’s Chennai-Bengaluru Industrial
Corridor)
It has been observed that states that lag in governance
reforms or infrastructure readiness generally struggle
for capital flows.
In this milieu, the Hon’ble Prime Minister has called
for the preparation of an Investment Friendliness
Index, recognising that companies and investors are
interested in India, and that states should be encouraged
to seize this opportunity and position themselves as
competitive investment destinations.
The index is expected to bring about greater
accountability and performance benchmarking among
the states. It will highlight best practices that can be
replicated across other states and encourage reforms
that collectively enhance the country’s investment
attractiveness.
In doing so, the index will foster healthy competition
among the states, motivating the states to improve,
while also learning from each other’s successes.
The index will go beyond merely ranking the states.
It will enable states to track, monitor, and evaluate
performance across multiple aspects that are important
for investors, such as infrastructure, regulatory ease,
business climate, financial health to name a few.
By assessing these parameters, the index aims to
ensure that the reforms at the state level are not
limited to policy announcements but also reflect in
on-the-ground implementation. The index will also
function as a repository of insights. Policymakers will
gain access to reliable data on areas where states
excel and those that require attention.
30Investment Friendliness Index
31
Chapter 2:
Approach and
methodology for
index preparation
2.1 Roadmap
Figure 2 provides the process followed to develop the Investment Friendliness Index.
Figure 2: Roadmap
10 Index scoring and formulation
9 Deployment of
investor perception
survey
5 Feedback from the
stakeholder discussions
6 Pillar and indicator
weightages finalised
4 Shortlisted 90
indicators out of 193
3 193 indicators
shortlisted initially
2 953
indicators
identified
8 Revised framework with 84
indicators designed
7 Advisory
committee discussion
1 Literature review and
designing of broad framework
32Investment Friendliness Index
2.2 Framework development
The first step involved reviewing secondary literature
to evaluate existing frameworks assessing a
state’s investment attractiveness. This included a
comprehensive literature review of benchmarking
frameworks such as Michel Henry Bouchet’s Country
Risk Assessment, the World Bank’s Ease of Doing
Business framework and the National Council of Applied
Economic Research’s State Investment Potential Index.
This was followed by assessing key factors that
influence investment decisions, which were
subsequently organised into broad pillars. Within each
pillar, relevant parameters were defined to capture
specific areas of performance. These parameters were
further represented through measurable indicators.
An exhaustive list of 953 indicators was prepared,
encompassing all critical aspects from an investor’s
perspective, across eight pillars.
2.3 Indicator refinement, assigning weights
and stakeholder consultations
The list of indicators was whittled down by evaluating
their significance in the pillars, i.e. those that could
directly influence decision-making, risk assessment,
or the overall attractiveness of a state for investors.
While streamlining the indicators for the Investment
Friendliness Index, four key metrics were considered:
Relevance, importance, measurability and availability.
An indicator’s relevance was determined by its
relationship in attracting investments to the state,
whereas its importance was measured by the extent to
which it influenced overall investment decisions. Each
indicator also had to be measurable, allowing for either
quantitative or qualitative assessment. Additionally,
the availability of reliable and up-to-date data on a
recurring basis through primary or secondary research
was essential to ensure that the indicator provided
an accurate and timely representation of the state’s
investment environment.
Figure 3: Eight pillars comprising the Investment Friendliness Index
Infrastructure Business climate Resources
Regulatory ease
Government policy
Financial healthInstitutional environmentEnvironment resilience
Approach and methodology for index preparation 33
Parallelly, the framework and indicators were re-evaluated
via top-down as well as bottom-up approaches.
In the top-down approach, the most critical indicators
under each pillar were assessed to ensure that the
framework was comprehensive and effective. In the
bottom-up approach, the list of indicators was refined,
based on stakeholder feedback, and those that captured
similar outputs were merged.
This exercise streamlined the framework and reduced
redundancy.
Figure 4: Process followed for indicator selection/rejection
Take the case of state gross fiscal deficit indicator. It meets the criteria as follows:
Verify the accurate
categorisation of
indicators within their
respective pillars
Indicator consolidation: Merge similar
indicators to eliminate redundancy,
reduce complexity and define indicators
sharply to ensure measurability
Rank the indicators in
descending order of scoring
based on their Importance and
Relevance, focusing on the
most critical indicators
Verify the regular availability of
the indicators to ensure that the
necessary data is consistently
accessible, reliable and up-to-date
Compile the final list of indicators,
which are accurately categorised,
consolidated, prioritised, and
supported by reliable data
Relevance
Yes. It reflects the
state’s financial
health and its
ability to invest in
infrastructure or
offer incentives to
businesses
Importance
Yes. A high fiscal
deficit may indicate
potential financial
instability, which
could affect a state’s
ability to attract long-
term investments
Measurability
Is quantifiable
Availability
The data is published
annually in the
secondary domain,
such as the Reserve
Bank of India’s
(RBI) Handbook of
Statistics
34Investment Friendliness Index
2.4 Stakeholder consultations
The stakeholder consultations helped
ensure that the framework accurately
reflected ground realities, prioritised
investor concerns and identified the
most crucial indicators for assessing
a state’s investment attractiveness,
thereby minimising potential oversights.
During these sessions, 165 stakeholders
across industry associations, regulatory
bodies, central ministries, consultancy
firms, sovereign wealth funds,
multilateral institutions, investment
banks and private equity firms were
consulted.
Based on feedback, 84 indicators were
chosen. Through these interactions,
valuable insights were also gathered
across the investment ecosystem,
ensuring that the framework was built
on a broad spectrum of perspectives
and expertise. Additionally, based on
research, indicative weightages were
assigned to the pillars and indicators,
which were then vetted through these
consultations.
2.5 Stakeholder feedback evaluation
The stakeholder feedback evaluation process involved
classifying the feedback into five distinct categories:
overarching recommendations, framework-specific
recommendations, indicator-specific recommendations,
perception-based recommendations, and miscellaneous.
This categorisation enabled us to systematically analyse
and address a diverse range of suggestions provided
by stakeholders.
Figure 5: Stakeholders
Figure 6: Stakeholder feedback
Stakeholders
State
Governments
Multilateral
Institutions
Industry
Associations
Consulting
Firms
Central
Ministries
Regulatory
Bodies
Investment
Banks & PE/VC
Firms
Sovereign
Wealth Funds
Miscellaneous
Overarching recommendations
Framework-specific recommendations
Indicator-specific recommendations
Perception-based recommendations
Approach and methodology for index preparation 35
This approach ensured a balanced assessment, where
quantitative data provided objective measurement and
qualitative feedback captured on-ground perspectives
that numbers alone may miss. Each recommendation
was carefully evaluated and prioritised as high, medium
or low.
The revised framework was developed based on the
feedback and suggestions received from stakeholders.
The iterative process ensured that the final framework
was robust, relevant and effective in achieving its
intended objectives.
The framework was ultimately finalised around eight
pillars and 84 indicators, comprising 62 secondary
and 22 perception-based indicators.
Tentative weights were assigned to the pillars through
a consultative and evidence-based approach to ensure
robustness and stakeholder alignment.
This helped identify the relative importance of various
dimensions that influence a state’s overall investment
attractiveness and industrial competitiveness, such
as infrastructure, business climate and resources.
Following the review, an initial set of pillar weights was
discussed with the Advisory Committee to align the
framework with the study’s objectives and strategic
priorities. These proposed weights were subsequently
validated through stakeholder consultations, and
the final pillar weights were determined based on
stakeholder feedback.
Figure 7: Pillar weights
Infrastructure
Regulatory
ease
Business climate
Financial health
Resources
Institutional
environment
Government
policy
Environment
resilience
25%
8 3 6
24 18 17 4
4
12%
20%
7%
15%
6%
10%
5%
#
indicators
36Investment Friendliness Index
Following finalisation of the pillar weights, indicator
weights were assigned.
The weight assigned to each pillar was first divided
equally among the indicators under the same pillar
to establish a base weight. Under this, the indicators
were classified into three priority tiers—high,
medium and low—based on the relative influence of
the pillar’s overall performance and their relevance.
• High-priority indicators were assigned a weight higher than the base weight
• Medium-priority indicators retained the base weight
• Low-priority indicators were assigned a weight lower than the base weight
This tier-based differentiation allowed the index to better capture the nuanced importance of specific indicators within each pillar. The proposed indicator
weights were then reviewed and validated by Advisory
Committee to ensure methodology robustness and alignment with stakeholder expectations.
The draft framework was finalised after deliberations
between NITI Aayog and Crisil.
Notably, this multi-stage, consultative process ensured
that the final weighting structure was both data-driven
and policy-aligned, enhancing the credibility and representativeness of the index outcomes.
2.6 Perception/primary surveys
The index comprises 22 indicators that capture on-
ground realities across key pillars used to assess states.
The survey was conducted with 1,850 investors across
36 states and union territories. Some investors had experience operating in multiple states, resulting in a total of 2,503 responses.
While secondary data provided a reliable quantitative
foundation, certain aspects critical to assessing
investment attractiveness were either unavailable or did
not fully capture on-ground realities. The perception/
primary survey, therefore, helped bridge this gap by
incorporating insights directly from stakeholders and
investors familiar with state-level business environment.
Perception often influences where businesses choose
to establish or expand operations. Hard data helps
validate existing perceptions for each parameter within
the framework, particularly those requiring investor
verification or ground-level assessment, ensuring that
the final index reflects not only statistical performance
but also the perceived ease, reliability and overall investment climate of each state.
Multiple questions contributed to the formation of a
single indicator, with the average score represented on
a 10-point scale. This average was then scaled up to a
100-point scale for consistency across all indicators.
2.7 Framework
Figure 9 illustrates the framework that was arrived at
post stakeholder consultations and literature surveys,
with weightages assigned to each pillar.
Figure 8: Indicators by priority
Indicators Priority
Gross state domestic product (GSDP) per capita H
Capital expenditure/GSDP M
Presence of Atal Tinkering Labs in the state per capita L
Approach and methodology for index preparation 37
Each pillar has been explained, highlighting the
parameters it covers and some representative
indicators it comprises. The entire list of pillar-wise
indicators is provided in Annexures.
1. Infrastructure
This pillar evaluates hard as well as soft
infrastructure essential for business operations
and the seamless functioning of industries.
In terms of hard infrastructure, the focus is on
storage and logistics, covering four key modes of
transport: road, rail, air and ports.
For air transport, airport capacity, cargo handling
relative to manufacturing output and the number of
airports in the state with international operations
are considered, as these factors indicate a state’s
capability to facilitate trade and global integration.
Figure 9: Framework
Pillars Parameters
Infrastructure
Resources
Business climate
Government
policy
Regulatory ease
Financial health
Environment
resilience
Institutional
environment
25%
20%
15%
10%
12%
7%
6%
5%
Logistics | Energy | Digital infrastructure | Industrial infrastructure
Economic performance
| Innovation ecosystem | Business facilitation
Natural resources
| Human resources
Incentives
| Approvals
Compliance
| Legal
Fiscal position
Governance and rule of law
Geophysical
| Weather-related
Shortlisted indicators: 84
Perception-based indicators: 22; secondary indicators: 62
38Investment Friendliness Index
For road infrastructure, road density, connectivity
and quality are assessed. Rail density is examined to
evaluate the effectiveness of rail transport, whereas
in ports, port capacity, along with turnaround times,
is analysed to measure efficiency.
In soft infrastructure, indicators related to digital
readiness, high-speed internet access and 5G
penetration are included. These elements are
crucial for supporting technology-driven industries
and modern service sectors. The framework also
incorporates investor perceptions of logistics
infrastructure.
2. Business climate
This pillar evaluates a state’s conduciveness
for starting, sustaining and scaling businesses,
focusing on three key components: Economic
performance, innovation and business facilitation.
Economic performance reflects the overall health
of a state’s economy. Key indicators include gross
state domestic product (GSDP) per capita, ratio of
exports-to-GSDP and foreign direct investment
(FDI) inflows. These indicators provide insight into
the state’s economic standing and its integration
with global markets, highlighting its potential to
attract investment.
Innovation is a critical component that showcases
the state’s capacity to foster new ideas and
entrepreneurial ventures, enabling businesses
to grow. Important indicators in this area are the
presence of incubators, and the number of startups
and patent applications. These metrics illustrate
the vibrancy of the entrepreneurial ecosystem and
the state’s readiness to support innovation.
Business facilitation encompasses systems and
infrastructure that support investors. This includes
credit availability to industries and the number
of bank branches, which together measures
accessibility of capital for business expansion.
Additionally, the efficiency of investor facilitation
centres, assessed through investor satisfaction,
reflects how easily investors can navigate the
regulatory and administrative landscape.
3. Resources
This pillar focuses on natural and human resources,
the two fundamental inputs that drive business and
industry. States with abundant natural resources
such as minerals, water and land have a competitive
edge in sectors such as steel, cement, power and
manufacturing.
Indicators such as the state’s share in national
production of metallic, non-metallic minerals, coal
and annual extractable groundwater availability
highlight the strength of this resource base.
Renewable resource potential, including solar,
wind, hydro and bioenergy, are also considered,
recognising the growing importance of sustainable
energy in attracting long-term investment.
Under human resources, indicators such as
the percentage of students enrolled in science,
technology, engineering and mathematics (STEM)
education, and annual addition of new technical
workforce and women workforce participation are
assessed to measure the depth and inclusiveness
of the labour pool.
The quality of higher education and employability is
measured through indicators such as the proportion
of colleges ranked among the top 100 nationally,
state expenditure on education and employer
satisfaction with the job readiness of graduates.
These factors demonstrate a state’s commitment
to developing a workforce capable of supporting
advanced industries and services.
Beyond economic considerations, quality-of-life
factors such as availability of schools, healthcare
and social infrastructure also influence investment
attractiveness. States that combine a strong natural
resource base with a skilled, healthy and productive
workforce create an ecosystem in which industries
can thrive. This balance ensures that the states
remain competitive in both resource-intensive and
knowledge-driven sectors.
4. Government policy
This pillar evaluates the incentives offered by
states and also the investor perception about
their on-ground implementation, as these factors
significantly impact decisions on where to invest.
Certain incentives, like those on capital expenditure
and research and development, can reduce the
cost of doing business and enhance companies’
competitiveness.
The proportion of total industrial capex a state sets
aside for disbursal as capex incentives annually
is a key metric that reflects the importance the
state accords for industrial growth. Similarly, the
ratio of overall incentive allocations to a state’s
Approach and methodology for index preparation 39
budget is an indication of its fiscal commitment
towards investment facilitation. The R&D incentives
disbursed, measured against a state’s gross value
added, is a measure of its support for innovation
and technology-driven industries. These ratios
enable a standardised comparison between states,
accounting for differences in size and industrial
base.
Beyond the numbers, stakeholder satisfaction
scores provide insights into the effectiveness of state
incentive schemes. Factors such as the design of
policies, efficiency and transparency in the approval
process and speed of incentive disbursement have
a direct influence on investor perceptions. High
satisfaction scores indicate that the incentive
system not only exists but is accessible, reliable
and responsive, reinforcing business confidence in
the state’s ability to support growth and operational
stability. States excelling in these domains tend to
foster an environment conducive to attracting new
businesses and retaining existing ones.
5. Regulatory ease
This pillar examines the impact of state-level
regulatory environment on investments by looking at
compliance requirements and investors’ on-ground
perception of the regulatory landscape. It evaluates
the burden, transparency and predictability
of regulations, which are the factors potential
investors often consider while deciding on new
locations. States that maintain streamlined and
stable regulatory frameworks, reduce operational
uncertainty and lower time and cost barriers for
new and existing businesses are widely viewed as
attractive investment destinations.
A range of indicators has been used to assess
regulatory ease. They include the number of
licences required, time taken to start a business
and the efficiency of approval processes for critical
utilities such as electricity and water. Timeliness
and reliability of land allotment procedures for
industrial purposes and costs and clearances for
environmental compliance are also vital metrics.
These data points quantify not only the direct
regulatory burden but also the efficiency of
government systems in facilitating business entry
and expansion. States that score favourably tend to
have higher investor satisfaction.
Qualitative aspects such as stakeholder
perceptions are equally important in the analysis
of investment attractiveness. Indicators such
as investor satisfaction with the single-window
system, perceived ease of environmental clearance
and the speed of approvals offer insights into how
regulations translate into day-to-day business
experiences. The presence of efficient commercial
courts and the average time required for exit
processes (such as closing operations) further
reinforce confidence in the state’s legal and
regulatory architecture. Investors regard easy exit
mechanisms and strong contract enforcement
as critical, especially when market or business
conditions necessitate a change or termination of
operations.
6. Financial health
The financial health of a state is a critical factor
in investment decisions as it directly impacts the
security and stability of investments. States with
sound fiscal management foster greater investor
confidence as they are better equipped to meet
financial obligations and provide a stable business
environment.
This pillar assesses the debt profile and fiscal
balance of a state through indicators such as
total outstanding liabilities as a percentage of
GSDP, interest payments as a share of GSDP and
gross fiscal deficit level. Elevated liabilities and
interest outflows indicate fiscal stress, which has
the potential to hinder a state’s ability to deliver
promised incentives. Additionally, persistent fiscal
deficits can signal a heavy reliance on borrowing,
potentially undermining the long-term capacity to
fund public services and infrastructure.
Analysing these metrics enables investors to
differentiate between fiscally prudent and risk-
prone states, helping them make informed
investment decisions. States with sound financial
health can offer better incentives, reduce the
cost of capital and serve as safer, more reliable
destinations for large-scale investments. The
financial health pillar ensures that state-level fiscal
health is transparently embedded within broader
assessments of investment potential.
7. Institutional environment
This pillar measures the efficiency, reliability and
transparency of a state’s governance system, as it
directly impacts policy stability, business operations
40Investment Friendliness Index
and dispute resolution. Strong institutions build
investor confidence through consistent application
of laws, swift grievance redressal and effective
commercial dispute management, thereby enabling
businesses to operate with minimal interference
and risk.
The assessment criteria for this pillar encompasses
the severity and frequency of labour disruptions,
including strikes and crimes, especially economic
offences, such as forgery and fraud. Additionally,
perception-based indicators include interference
by officials, satisfaction with transparency and
governance, and accessibility and efficiency of
grievance redressal systems. The assessment also
tracks the number of cybercrimes, reflecting the
growing importance of digital infrastructure.
States that perform well on these indicators have
a high degree of predictability, policy continuity
and procedural justice, which are essential for
attracting and retaining investments. This pillar
ensures that state rankings capture not only
the economic potential but also the capacity to
sustain it through stable, transparent and investor-
friendly governance— the attribute that creates a
favourable business environment that encourages
long-term investments and collaborations, thereby
contributing to a state’s economic growth and
development.
Moreover, a robust institutional framework
can facilitate the implementation of policies
and programmes that promote innovation,
entrepreneurship and job creation, which are
essential for a state’s overall competitiveness. By
prioritising institutional environment, states can
position themselves as reliable and attractive hubs
for investors, businesses and talent.
8. Environment resilience
This pillar examines the environmental and disaster-
related vulnerabilities of a state, as they directly
impact business continuity and asset security.
Natural calamities, such as earthquakes, cyclones,
floods and pollution, are increasingly influencing
investor decisions, as exposure to these events can
lead to operational interruptions, cost escalation
and reduced value of fixed assets.
Indicators under the pillar include the proportion
of high-risk earthquake zones in a state’s total
area, its air quality index (AQI) and comprehensive
metrics on the frequency and severity of cyclones,
flooding and landslides. Investing in states with
poor AQI or frequent extreme weather events
exposes businesses to higher insurance costs and
losses from infrastructure damage or health-related
disruptions. Notably, stakeholder perceptions
of disaster preparedness are also factored in,
revealing the effectiveness of state policies and
response systems.
States with effective disaster risk management and
robust environmental regulations are positioned as
resilient destinations, attracting investors seeking
to minimise operational disruptions and long-term
risks. The environment resilience pillar provides
essential clarity on the resilience and adaptability
of a state’s investment climate, helping investors
devise risk-adjusted investment strategies.
By considering these factors, investors can make
informed decisions that balance potential returns
with environmental and disaster-related risks. A
state’s ability to mitigate and respond to natural
disasters can influence its reputation and appeal
to investors, talent and tourists. Thus, a strong
performance of this pillar can be a key differentiator
for states seeking to attract investment and drive
sustainable economic growth.
2.8 Data homogenisation and scoring
Establishing a uniform framework to score
states is crucial for consistent monitoring and
assessment of their performance across key
indicators of investment readiness. A standardised
scoring mechanism enables comparability and
helps identify areas that require targeted policy
intervention. However, given the diverse nature of
the data, which spans quantitative metrics and
qualitative perceptions, data homogenisation
is crucial for ensuring fairness and accuracy in
evaluation. This process establishes a reliable
foundation for ranking and benchmarking states,
thereby promoting healthy competition and
encouraging continuous improvement.
To score indicators on a common scale of 0-100, a
scoring methodology was developed for states. The
shortlisted indicators were categorised into two
groups and scored accordingly:
1. Secondary indicators: Directly measurable and
quantitative
Approach and methodology for index preparation 41
2. Perception-based indicators: Qualitative and
subjective
Secondary indicators
For secondary indicators, the min-max normalisation
was adopted for scoring as shown below:
(S - Min)
Normalised score =
(Max - Min)
Where S= state score
Using this formula, each state’s score (S) was
translated into a range between 0 and 100. A
score equal to the minimum will become 0 and
a score equal to the maximum will become 100,
with scores in between scaled accordingly. For
certain states exhibiting outlier data points, a
trimmed min-max standardisation method was
employed. This approach is further elaborated in
the Annexure 2 section. For Union Territories such
as Ladakh, Lakshadweep and Puducherry, the
average of available scores across indicators is
taken to compensate for the lack of data on certain
indicators.
Unlike quantitative data, no minimum-maximum
or trimmed minimum-maximum normalisation was
applied to the perception-based indicators, as the
scoring inherently reflected relative respondent
sentiment within the defined scale.
Survey framework and statistics
• Indicator coverage: 22 perception-based
indicators, each comprising one or more
questions, resulting in a total of 41 questions
across indicators
• Respondent base: 1,850 unique respondents across 36 states and union territories, amounting to 2,503 responses
• Stratified respondent sampling: Respondents are categorised into large and MSME segments as well as sectors to provide a nuanced understanding of state performance
• Multi-state perspectives: As some respondents possess knowledge of multiple states, the number of responses exceeds the number of unique respondents, reflecting the broader geographic insights captured in the survey
Figure 10: Geographical distribution of responses
6
131
5
4548
17
39
7
120
75
201
126
41
3433
199
104
21
116
341
58
37
38
1
55
102
2
178
108
14
156
51
84
A & N Islands
Andhra Pradesh
Arunachal Pradesh
Assam
Bihar
Chandigarh
Chhattisgarh
DNH & DD
Delhi
Goa
Gujarat
Haryana
Himachal Pradesh
Jammu & Kashmir
Jharkhand
Karnataka
Kerala
Ladakh
Lakshadweep
Madhya Pradesh
Maharashtra
Manipur
Meghalaya
Mizoram
Nagaland
Odisha
Puducherry
Punjab
Rajasthan
Sikkim
Tamil Nadu
Telangana
Tripura
Uttar Pradesh
Uttarakhand
West Bengal
42Investment Friendliness Index
Figure 11: Categorisation of respondents based on revenue size
Figure 12: Distribution of respondents across industries
Textiles, apparel, and leather
Trade and Commerce
Others Chemicals
Automotive
Energy and
Utilities
Food Processing
Hotels and
Tourism
Agriculture and
Allied
Construction and
Real Estate Transportation
Minerals
Electronics
IT and ITES Financial services Pharmaceuticals
10%
10%
10%
9%
6%
6%
5%
4%
3%
2%
4%
5%
6%6%
7% 7%
MSMEs
88%
Large corporates
12%
Approach and methodology for index preparation 43
Group No. of statesList of states
Large states 17
Andhra Pradesh, Bihar, Chhattisgarh, Gujarat, Haryana,
Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra,
Odisha, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh
and West Bengal
Union territories
and city states
7
Andaman and Nicobar Islands, Chandigarh,
Dadra & Nagar Haveli and Daman & Diu, Delhi, Goa,
Lakshadweep and Puducherry
Hilly and
northeastern
states
12
Arunachal Pradesh, Assam, Himachal Pradesh,
Jammu and Kashmir, Ladakh, Manipur, Meghalaya, Mizoram,
Nagaland, Sikkim, Tripura and Uttarakhand
The overall ranking is a comprehensive
benchmarking of states, highlighting their relative
attractiveness for investments and potential for
economic growth. It will enable states to assess
their strengths and weaknesses, pinpoint areas for
improvement and develop targeted strategies to
enhance their investment climate.
2.9 State categorisation
Given their vast diversity, comparing states and
union territories on a uniform scale can overlook
inherent structural and contextual differences.
To ensure a more balanced and meaningful
assessment, states were categorised into three
groups: hilly and northeastern states, large states
and city states/union territories.
This classification enables each state to be
evaluated against peers that enjoy similar
geographic, demographic and administrative
characteristics. For instance, hilly and northeastern
states often face terrain-related challenges, which
can impact infrastructure development and access
to resources. Meanwhile, larger states typically
operate with complex governance systems and
diverse regional dynamics. City states and union
territories, on the other hand, have compact
geographies and distinct administrative setups.
The framework adopted for this assessment
accounts for these structural differences and
ensures fairer and more accurate comparisons,
revealing the true picture of a state’s performance
relative to peers with similar contextual realities.
To facilitate a more accurate assessment of relative
performance, considering the inherent geographical
advantages and disadvantages, the states have
been grouped into the following categories:
Table 1: State categorisation
44Investment Friendliness Index
State profile report
A comprehensive state profile, as illustrated in Figure 13, has been developed for each state,
providing a detailed snapshot of the state’s performance across various pillars and key
performance indicators. The profile highlights a state’s strengths, showcasing the pillars
and indicators that have contributed to its success. It also identifies areas where the state
can improve, providing a clear roadmap for growth and development.
Note: For illustrative purposes only
Figure 13: State profile
State/UT
Area: - sq km
GSDP per capita: Rs -
Agriculture share of GVA (FY23): -%
Industry share of GVA (FY23): -%
Services share of GVA (FY23): -%
FDI inflow (FY24): Not available
*
Key industries: -
Key enable rs• Institutional environment
• Infrastructure
Data score (65) Survey score (35)
Areas needing improvement
• Government policy
Key performance indicators
• GSDP per capita
Indicators for improvement
• Share of renewables in power
generation capacity
Overall
Rank
Score
Category
rank-
-
C/L/N
State category
L – Large state
C – City state
N – Northeastern/hilly state
1 7. 7 12.6
Approach and methodology for index preparation 45
Basic state information
Each profile begins with fundamental details
about the state, including its category, i.e.
whether it is a large state, or a city state, or
a northeastern state, geographical area in
sq km and GSDP per capita. The profile also
outlines the sectoral composition of GVA across
agriculture, industry and services, along with
data on FDI inflow and key industries driving the
state’s economy.
Overall performance
This section presents a state’s overall score
and rank as derived from the composite index,
providing a snapshot of its relative position
among peer states.
Key enablers and areas requiring improvement
Under this section, a state’s performance is
examined across various pillars to identify key
enablers, the parameters with strong outcomes
and areas needing improvement, highlighting
aspects that require further policy focus or
developmental attention.
Key factors driving the state’s score
This narrative section elaborates on the
parameters and contextual factors behind a
state’s performance across broad pillars, such
as infrastructure, resources, business climate,
etc. It provides insights into the underlying
drivers and enabling conditions behind the
observed results.
Voices from the ground
*
Based on primary survey feedback, this
section captures the qualitative perspectives
of stakeholders, including positive feedback,
success stories, lived experiences and areas of
focus in a state. These perceptions complement
the quantitative findings and help present a
more holistic picture of a state’s performance.
Together, these sections provide a well-rounded
picture of the performance of each state by
combining numbers with real-world insights.
Hence, the state profile section brings together
data, context and feedback to show both
strengths and areas for improvement for each
state, helping readers understand how and why
states perform the way they do.
*
Voices from the ground available for 33/36 states
Infrastructure
Business climate
Resources
Government
policy
Regulatory ease
Institutional
environment
Financial health
Environment
resilience
60%42%
47%33%
40%
29%
57%
56%
54%
71%
76%62%
58%
66% 86%
100%
Best statePillar average
31%
7%
37%
58%
28%
39%
31%
27%
Note: For illustrative purposes only
46Investment Friendliness Index
47
Chapter 3:
Results
3.1 Overall performance of the states
The composite score of every state/Union Territory was computed by
aggregating their performance across each of the indicators coalescing into
pillars. The scores are computed out of 100.
Figure 14: Performance of states on Investment Friendliness Index
Top performers Frontrunners Emerging
performers
Aspiring states
48Investment Friendliness Index
Based on the scoring methodology, states are categorised into four groups:
Category States/Union Territories
Top performers Goa, Gujarat, Maharashtra, Odisha, Tamil Nadu
Frontrunners
Andhra Pradesh, Assam, Chandigarh, Chhattisgarh, Delhi, Haryana,
Himachal Pradesh, Karnataka, Kerala, Madhya Pradesh, Rajasthan, Telangana,
Tripura, Uttarakhand, Uttar Pradesh
Emerging
performers
Bihar, Jammu and Kashmir, Jharkhand, Meghalaya, Nagaland, Puducherry,
Punjab, West Bengal
Aspiring states
Andaman and Nicobar Islands, Arunachal Pradesh, Dadra & Nagar Haveli and
Daman & Diu, Ladakh, Lakshadweep, Manipur, Mizoram, Sikkim
Geographical categorisation of states
Given the diversity among Indian states and Union
Territories, comparing these on a uniform scale can
overlook the inherent structural and contextual
differences. To make the assessment more balanced
and meaningful, states were divided into three
categories: large states (L), hilly and northeastern
states (H), and City States/ Union Territories (C).
This classification allows each state to be evaluated
against others that broadly share similar geographic,
demographic and administrative characteristics.
Hilly and northeastern states, for instance,
often face terrain-related challenges, affecting
infrastructure and resource access, whereas larger
states operate with complex governance systems
and varied regional dynamics. City States and
Union Territories, on the other hand, have compact
geographies and unique administrative setups.
By accounting for these structural differences,
the framework ensures fairer and more accurate
comparison, highlighting a state’s performance
relative to peers with similar contextual realities.
In total, five states are top performers and 15 are frontrunners. Eight states/Union Territories each are
categorised as emerging performers and aspiring states.
Top performers
States with scores greater than 50
Frontrunners
States with scores from 45 to 50
Emerging performers
States with scores equal to or greater than 40 but less than 45
Aspiring states
States with scores
less than 40
Results 49
Gujarat
Gujarat leads the ranking, with an
overall score of 56.6. The state’s score is
driven by its strong performance across
infrastructure, business climate, financial
health, regulatory ease and government
policy pillars, with areas of improvement
in the resources, institutional environment
and environment resilience pillars.
Gujarat’s high rank in infrastructure is on
account of its efficient port operations
(lowest turnaround time weighted by
capacity for major and non-major ports)
Performance across geographical categories
Figure 15: Performance of large states
Note: Scores are out of 100
Scores have been rounded to one decimal place, though calculations were carried out to three decimal places
Top three performers: Large states
Gujarat 56.6
53.3
53.7Maharashtra
Tamil Nadu
52.4Odisha
48.9Madhya Pradesh
48.7Andhra Pradesh
48.7Karnataka
48.1Rajasthan
47.5Chhattisgarh
47.3Telangana
4 7.1Haryana
46.6Kerala
45.0Uttar Pradesh
44.7Punjab
41.3West Bengal
41.3Jharkhand
41.2Bihar
50Investment Friendliness Index
Maharashtra
Maharashtra records an overall
score of 53.7, ranking second
in both the L category and at
the pan-India level. The state’s
score is driven by its leading
performance in the business
climate pillar. The score is
further supported by a strong
performance in the resources
and financial health pillars, with
infrastructure and regulatory
ease areas for improvement.
Its business climate score is
driven by the state attracting
the highest share of PE/VC
investments, i.e. 35% of the
investments in the country,
along with the highest number
of ATLs at 1,033, i.e. 10% of
the total ATLs in the country.
Maharashtra’s performance
in the business climate pillar
is driven by its economic
indicators, featuring a GSDP
per capita of Rs 216,710, which
ranks 11th among 36 states
and Union Territories.
Maharashtra is also in the top
five states in resources on
account of having the highest
budget among the states for
skilling, while ranking second
in terms of renewable resource
potential as well.
It scores in the top five in the
financial health pillar because
of its lowest fiscal deficit as a
percentage of GSDP among the
large states (3.94% in fiscal
2024).
and efficient power sector, driven
by competitive industrial and
commercial power costs and
well-contained transmission
and distribution (T&D) losses.
The state offers power to
industrial users at ~29% below
the pan-India average. Electricity
downtime in the state is also low,
with an average power supply
of 23.8 hours a day (4% higher
than the large state average),
thus providing reliable and
uninterrupted power supply to
businesses.
Gujarat ranks in the top five
states in business climate,
fuelled by high exports at ~31%
of India’s merchandise exports,
nearly two times the next highest
state, and a robust GSDP growth
rate, ranking third overall during
fiscal 2019-2024. Further, the
business climate is bolstered
by the presence of 614 ATLs as
of fiscal 2025. The state has 1.24
ATLs per lakh population, which
is ~19% higher than the average
for the L category. A healthy
presence of ATLs helps foster
innovation and entrepreneurship
across the state.
Gujarat also scores well on the
financial health pillar because it
has the lowest fiscal deficit as
a percentage of GSDP (2.81%)
among the states, as of fiscal
2024. Its sound financial health is
also evidenced by its outstanding
liabilities as a percentage of
GSDP, which remains well-
managed and sustainable at
~18%, ~40% below the average
for the large states.
Results 51
Tamil Nadu
Tamil Nadu records an
overall score of 53.3, ranking
third at the pan-India level
and the L category. Tamil
Nadu’s score is driven by its
strong performance in the
infrastructure and business
climate pillar, with financial
health emerging as an area for
improvement.
The state’s first rank in
the infrastructure pillar
among large states can be
explained by its efficient port
infrastructure, with it ranking
third in turnaround time at
ports weighted by capacity,
low electricity downtime
(4% below the large state
average) and contained T&D
losses (~3% below large state
average).
Its score in the business
climate pillar is because the
state has the second-highest
number of ATLs in India and an
MoU conversion rate of nearly
100%. Investors commended
the state on its consistency in
terms of policies. Tamil Nadu
is also excelling in export
performance, with its export-
to-GSDP ratio 36% higher
than the category average.
Figure 16: Performance of hilly and northeastern states
47.5Uttarakhand
47.3Assam
46.1Himachal Pradesh
45.0Tripura
43.0Meghalaya
41.2Nagaland
40.2Jammu and Kashmir
39.9Mizoram
37.5Arunachal Pradesh
36.6Sikkim
32.3Manipur
2 7. 0Ladakh
Note: Scores are out of 100
Scores have been rounded to one decimal place, though calculations were carried out to three decimal places
52Investment Friendliness Index
Assam
Assam records an overall score
of 47.3, ranking second among
northeastern and hilly states
and 14th overall. The score
is primarily driven by sound
financial health and good
institutional environment, with
minimal impact from labour
disruptions. However, there are
areas for improvement within the
resources pillar.
Assam’s performance in
institutional environment is
driven by low severity of labour
disruptions and perceived
consistency in state policies.
The state’s focus on education is
visible through an average of 18%
allocation of its budget towards
education between fiscals 2019
and 2024 compared with the hilly
and northeastern states’ average
of ~12%.
Assam’s financial health pillar
is supported by a controlled
level of interest payments at
2.8% of GSDP (24% lower than
the average across hilly and
northeastern states), reflecting
prudent fiscal management and
stability in the state’s finances.
Top three performers: Hilly and northeastern states
Uttarakhand
Uttarakhand records an overall
score of 47.5, ranking first among
northeastern and hilly states and
11th overall. Its strengths include
human resources, characterised by
a strong inflow of graduates into
the workforce. The state excels in
the number of individuals entering
the workforce as a percentage of
the population, which is also the
highest percentage of workforce
entrants among the northeastern
and hilly states. However, there
is scope for improvement within
the infrastructure pillar.
The state offers good banking
facilities and financial availability,
complemented by a favourable
industrial environment. This is
evidenced from the fact that the
number of functioning offices of
commercial banks per capita is
20% higher than the average for
hilly and northeastern states.
Further, the credit provided by
banks to industry as a percentage
of manufacturing GSDP is ~66%
higher than the average for hilly
and northeastern states. The state
provides a seamless and efficient
experience for businesses, with
all government-related paperwork
processed through a single-
window online platform in a short
timeframe.
Also, in 2024, the number of patents
filed was 1,637, which was higher
than the pan-India average by 28%.
This indicates a robust environment
for innovation and a commitment
to fostering intellectual property
development.
Results 53
Himachal Pradesh
Himachal Pradesh achieves an
overall score of 46.1, ranking
third among northeastern and
hilly states and 17th overall.
This score is primarily driven by
its performance in the resources
pillar, bolstered by strong
women workforce participation
and effective institutional
performance. However, there is
scope for improvement within
the environment resilience pillar.
Himachal Pradesh’s strong
performance in the resources
pillar is driven by a notable
proportion of people entering the
workforce as a percentage of the
population (1.1%), high women
worker population share of 62.3%
(18.0% higher than the average
for hilly and northeastern states)
and a robust overall labour force
participation rate of 63.3%, which
is comfortably above the category
average of 48.0%.
The state’s strength in
institutional environment is
supported by a low cybercrime
rate of 1.12 offences per lakh
population (~45% lower than
the average crime rate for hilly
and northeastern states), an
effective grievance redressal
mechanism and a conducive
regulatory environment, all of
which contribute to a stable and
supportive climate for residents
and businesses.
Figure 17: Performance of Union Territories and City States
DNH & DD – Dadra and Nagar Haveli and Daman and Diu; A&N – Andaman and Nicobar Islands
Note: Scores are out of 100
Scores have been rounded to one decimal place, though calculations were carried out to three decimal places
49.9
53.1Goa
Delhi
4 7. 0Chandigarh
44.9Puducherry
3 7.1DNH & DD
30.2A&N Islands
24.5Lakshadweep
54Investment Friendliness Index
Top three performers: Union territories and city states
Goa
Goa records an overall score
of 53.1, topping the rankings
for City States and ranking
fourth at the pan-India level.
Goa’s strong performance is
driven by the highest scores in
both resources and regulatory
ease pillars, with a respectable
performance in Infrastructure
as well. However, institutional
environment has emerged as an
area for improvement.
Goa has the highest spending as
a percentage of GSDP on skilling
and healthcare investments,
aiding its performance under
the resources pillar. A high
proportion of STEM enrolment
(25% of higher education
enrolment is in STEM courses),
which supports a skilled and
technology-oriented workforce,
further aids its performance
in resources. Goa secures
the highest rank in the Union
Territories and City States
category with respect to STEM
enrolment as a percentage
of total enrolment in higher
education. Additionally, it ranks
well in vocational training
capacity and secures 1st rank
among Union Territories and City
States on this indicator.
Its strong performance under
the infrastructure pillar is on
account of two international
airports, which account for 3%
of the capacity of all airports in
India. Its port capacity is also
3% of the total in India, with
dedicated terminals for handling
containers, dry bulk and POL
(petroleum, oil, and lubricants)
products. This is despite Goa
only accounting for 0.35% of
India’s GDP contribution.
The state has the highest share
of renewables in its power mix
across all states and Union
Territories, and also scores well
on the low share of T&D losses
at just ~7%.
Delhi
Delhi achieves an overall score of 49.9, ranking second among City States and sixth overall. This
score is primarily driven by its performance in the infrastructure pillar, supported by adequate cargo capacity as well as sound financial health. However, there
are areas for improvement within the institutional environment pillar.
Delhi’s infrastructure pillar is
supported by its second rank in
airport cargo capacity relative
to manufacturing GVA, and a
rail network of 84 km despite
its small land area. T&D losses
were ~12% in fiscal 2023 (13%
lower than the City States and
Union Territories average), and
it maintained an average of 24
hours of power supply (ranks first
among Union Territories and City
States), indicating no downtime.
These factors collectively ensure
efficient connectivity and reliable
Results 55
Chandigarh
Chandigarh achieves an overall
score of 47, ranking third among
City States and 16th overall. This
score is primarily driven by its
performance in the infrastructure
and resources pillars, supported
by a high inflow of tech workforce.
However, there are notable areas
for improvement within the
institutional environment pillar.
Chandigarh’s top ranking in the
infrastructure pillar is supported
by it achieving the highest rail
density across states and Union
Territories. Its industrial power
cost is also 11% lower than
the Union Territories and City
States average, enhancing its
attractiveness for businesses.
Additionally, strong 4G and 5G
penetration is reflected in a
high number of base transceiver
stations (BTSs), with nearly 31 BTS
per sq km (2.5 times the average
for Union Territories and states
category), ensuring robust digital
connectivity.
Chandigarh’s strong performance
in the resources pillar is
demonstrated by its first rank
across all states/Union Territories
in the addition of new technical
workforce as a percentage
of population (2.5 times the
average for Union Territories
and City States). Additionally,
workforce participation is notable,
with 2.42% of the population
entering the workforce annually
as graduates and postgraduates,
which is 92% higher than the
category average.
The charts below provide a
scoring of all states across the
eight pillars.
power supply for businesses
and residents.
In the financial health pillar,
Delhi benefits from outstanding
liabilities of just 5.2% of its
GSDP (significantly lower
than the Union Territories and
City States average of ~9.4%)
and a gross fiscal deficit of
0.7% of GSDP, 57% below the
average for City States and
Union Territories. This reflects
prudent fiscal management
and contributes to its overall
financial stability.
56Investment Friendliness Index
9.1
9.6
10.1
10.5
10.5
10.7
10.9
11.2
11.4
11.4
11.5
12.0
12.1
12.3
12.6
13.6
13.7
Chhattisgarh
Jharkhand
Karnataka
Telangana
Madhya Pradesh
Rajasthan
Bihar
Uttar Pradesh
Maharashtra
Odisha
Haryana
Punjab
Andhra Pradesh
West Bengal
Kerala
Tamil Nadu
Gujarat
6.9
7.8
7.9
7.9
8.6
8.9
9.4
10.0
10.2
10.2
10.7
11.2
Ladakh
Manipur
Sikkim
Nagaland
Mizoram
Meghalaya
Jammu & Kashmir
Tripura
Arunachal Pradesh
Uttarakhand
Assam
Himachal Pradesh
6.2
7.6
9.4
10.5
14.0
14.0
15.0
Lakshadweep
A & N Islands
DNH & DD
Puducherry
Delhi
Goa
Chandigarh
3.2 State scores: Across pillars and overall
Pillar - Infrastructure
Note: Scores are out of 25 and states are scored relative to
the performance of other states
Top performers Frontrunners Emerging
performers
Aspiring states
Large states
Northeastern and hilly states
City states and UTs
Results 57
9.4
9.3
9.2
9.2
8.0
7.8
7.2
7.2
6.9
6.6
6.3
5.9
5.7
5.5
5.2
4.5
4.4
Maharashtra
Karnataka
Tamil Nadu
Gujarat
Haryana
Telangana
Odisha
Punjab
Andhra Pradesh
Uttar Pradesh
Kerala
Rajasthan
Chhattisgarh
Madhya Pradesh
Bihar
West Bengal
Jharkhand
7.8
7.0
6.4
6.3
6.2
6.2
5.6
5.5
5.5
5.3
5.0
4.6
Sikkim
Uttarakhand
Assam
Jammu & Kashmir
Himachal Pradesh
Arunachal Pradesh
Mizoram
Ladakh
Nagaland
Tripura
Meghalaya
Manipur
5.0
5.5
6.0
6.2
6.4
8.4
9.3
Lakshadweep
A & N Islands
Puducherry
Chandigarh
DNH & DD
Goa
Delhi
Pillar - Business climate
Note: Scores are out of 20 and states are scored relative to
the performance of other states
Top performers Frontrunners Emerging
performers
Aspiring states
Large states
Northeastern and hilly states
City states and UTs
58Investment Friendliness Index
8.2
8.1
8.0
7.7
7.7
7.2
6.7
6.7
6.6
6.3
5.7
5.6
5.4
5.4
5.3
5.2
4.8
Odisha
Maharashtra
Chhattisgarh
Madhya Pradesh
Rajasthan
Andhra Pradesh
Tamil Nadu
Karnataka
Telangana
Gujarat
Uttar Pradesh
Kerala
Jharkhand
Bihar
Haryana
West Bengal
Punjab
7.2
7.1
6.0
5.8
5.7
5.3
5.1
4.7
4.7
4.6
4.1
3.6
Himachal Pradesh
Uttarakhand
Meghalaya
Manipur
Sikkim
Assam
Tripura
Mizoram
Jammu & Kashmir
Arunachal Pradesh
Ladakh
Nagaland
3.7
4.6
5.1
5.3
6.0
6.4
8.3
Lakshadweep
A & N Islands
Delhi
DNH & DD
Puducherry
Chandigarh
Goa
Pillar - Resources
Note: Scores are out of 15 and states are scored relative to
the performance of other states
Top performers Frontrunners Emerging
performers
Aspiring states
Large states
Northeastern and hilly states
City states and UTs
Results 59
5.4
5.1
4.8
4.6
3.8
3.6
3.5
3.1
3.1
3.0
2.8
2.6
2.6
2.5
2.3
2.0
1.7
Madhya Pradesh
Gujarat
Rajasthan
Odisha
Maharashtra
Telangana
Karnataka
Haryana
Andhra Pradesh
Tamil Nadu
Uttar Pradesh
Jharkhand
Kerala
Chhattisgarh
Bihar
Punjab
West Bengal
4.9
4.7
4.6
4.0
3.1
2.2
2.1
1.9
1.8
1.7
0.9
0.8
Assam
Nagaland
Tripura
Jammu & Kashmir
Himachal Pradesh
Meghalaya
Uttarakhand
Sikkim
Arunachal Pradesh
Mizoram
Manipur
Ladakh
0.7
0.8
1.4
1.8
2.6
2.6
4.8
A & N Islands
Lakshadweep
DNH & DD
Delhi
Goa
Chandigarh
Puducherry
Pillar - Government policy
Note: Scores are out of 10 and states are scored relative to
the performance of other states
Top performers Frontrunners Emerging
performers
Aspiring states
Large states
Northeastern and hilly states
City states and UTs
Kerala
Jharkhand
60Investment Friendliness Index
8.4
8.1
8.1
8.0
7.9
7.9
7.9
7.7
7.5
7.3
7.3
7.3
7.1
7.0
6.9
6.4
6.2
Chhattisgarh
Rajasthan
Punjab
Tamil Nadu
Gujarat
Kerala
Madhya Pradesh
Andhra Pradesh
Telangana
Maharashtra
Haryana
Uttar Pradesh
West Bengal
Bihar
Odisha
Jharkhand
Karnataka
8.5
8.2
8.2
7.9
7.7
7.7
7.2
7.2
6.0
4.8
3.7
3.2
Meghalaya
Nagaland
Tripura
Himachal Pradesh
Uttarakhand
Assam
Mizoram
Jammu & Kashmir
Arunachal Pradesh
Manipur
Sikkim
Ladakh
2.9
4.4
5.4
6.7
7.1
7.5
8.5
Lakshadweep
A & N Islands
Puducherry
DNH & DD
Delhi
Chandigarh
Goa
Pillar - Regulatory ease
Note: Scores are out of 12 and states are scored relative to
performance of other states.
Top performers Frontrunners Emerging
performers
Aspiring states
Large states
Northeastern and hilly states
City states and UTs
Results 61
Pillar - Institutional environment
Top performers Frontrunners Emerging
performers
Aspiring states
Note: Scores are out of 6 and states are scored relative to
performance of other states.
4.5
4.4
4.4
4.3
4.1
4.1
4.0
3.9
3.9
3.3
2.8
2.3
Nagaland
Tripura
Meghalaya
Himachal Pradesh
Uttarakhand
Mizoram
Assam
Jammu & Kashmir
Arunachal Pradesh
Manipur
Sikkim
Ladakh
2.9
3.5
3.7
3.8
3.8
3.8
3.8
3.9
3.9
3.9
4.0
4.0
4.1
4.2
4.2
4.3
4.5
Telangana
Karnataka
Odisha
Jharkhand
Rajasthan
Bihar
Maharashtra
Andhra Pradesh
West Bengal
Haryana
Uttar Pradesh
Kerala
Gujarat
Tamil Nadu
Madhya Pradesh
Punjab
Chhattisgarh
2.2
3.2
3.2
3.5
3.7
3.8
3.9
Lakshadweep
Puducherry
DNH & DD
A & N Islands
Delhi
Chandigarh
Goa
Large states
Northeastern and hilly states
City states and UTs
62Investment Friendliness Index
6.7
6.5
6.3
5.6
5.6
5.4
4.7
4.7
4.5
4.5
4.0
4.0
4.0
3.8
3.6
3.1
2.9
Gujarat
Odisha
Maharashtra
Jharkhand
Karnataka
Chhattisgarh
Haryana
Telangana
Tamil Nadu
Uttar Pradesh
Andhra Pradesh
Madhya Pradesh
Bihar
Kerala
Rajasthan
West Bengal
Punjab
5.4
4.8
4.6
3.8
3.8
3.6
3.4
3.1
2.6
1.9
1.1
0.8
Uttarakhand
Assam
Mizoram
Tripura
Meghalaya
Sikkim
Nagaland
Himachal Pradesh
Manipur
Ladakh
Arunachal Pradesh
Jammu & Kashmir
1.8
2.0
2.1
3.3
4.3
5.6
7.0
Lakshadweep
A & N Islands
DNH & DD
Chandigarh
Goa
Puducherry
Delhi
Pillar - Financial health
Top performers Frontrunners Emerging
performers
Aspiring states
Note: Scores are out of 7 and states are scored relative to the
performance of other states.
Large states
Northeastern and hilly states
City states and UTs
Results 63
4.0
4.0
3.9
3.9
3.9
3.8
3.7
3.7
3.6
3.6
3.6
3.5
3.4
3.4
3.3
3.1
2.7
Tamil Nadu
Chhattisgarh
Kerala
Andhra Pradesh
Odisha
Telangana
Karnataka
Gujarat
Madhya Pradesh
Maharashtra
Rajasthan
Punjab
West Bengal
Jharkhand
Haryana
Uttar Pradesh
Bihar
4.3
3.9
3.9
3.8
3.5
3.5
3.5
3.3
3.1
3.1
2.5
2.2
Meghalaya
Jammu & Kashmir
Uttarakhand
Arunachal Pradesh
Tripura
Assam
Mizoram
Nagaland
Himachal Pradesh
Sikkim
Manipur
Ladakh
1.8
1.9
2.0
2.2
2.5
3.0
3.4
Lakshadweep
Delhi
A & N Islands
Chandigarh
DNH & DD
Goa
Puducherry
Pillar - Environment resilience
Note: Scores are out of 5 and states are scored relative to
the performance of other states.
Top performers Frontrunners Emerging
performers
Aspiring states
Large states
Northeastern and hilly states
City states and UTs
64Investment Friendliness Index
Top performers Frontrunners Emerging
performers
Aspiring states
Figure 18: Performance of states on Investment Friendliness Index
Results 65
Table 2: Rank and score of states on Investment Friendliness Index
Rank State/Union Territory Overall score
1 Gujarat 56.6
2 Maharashtra 53.7
3 Tamil Nadu 53.3
4 Goa 53.1
5 Odisha 52.4
6 Delhi 49.9
7 Madhya Pradesh 48.9
8 Andhra Pradesh 48.7
9 Karnataka 48.7
10 Rajasthan 48.1
11 Uttarakhand 47.5
12 Chhattisgarh 47.5
13 Telangana 47.3
14 Assam 47.3
15 Haryana 4 7.1
16 Chandigarh 4 7. 0
17 Kerala 46.6
18 Himachal Pradesh 46.1
19 Uttar Pradesh 45.0
20 Tripura 45.0
21 Puducherry 44.9
22 Punjab 44.7
23 Meghalaya 43.0
24 West Bengal 41.3
25 Jharkhand 41.3
26 Bihar 41.2
27 Nagaland 41.2
28 Jammu & Kashmir 40.2
29 Mizoram 39.9
30 Arunachal Pradesh 37.5
31 DNH & DD 3 7.1
32 Sikkim 36.6
33 Manipur 32.3
34 A & N Islands 30.2
35 Ladakh 2 7. 0
36 Lakshadweep 24.5
Investment Friendliness Index Investment Friendliness Index
66
67
Conclusion
The Government of India recognises the importance of creating
a conducive business environment to attract investments and
stimulate economic growth. States play a crucial role in driving
such investments. To effectively monitor and evaluate the
performance of states on this front, an index that combines
publicly available data with investor perceptions is essential.
It will help in assessing the investment attractiveness of the
states, facilitating the creation of an Investment Friendliness
Index. The index, thus conceived, includes measurable
indicators and perception-based metrics that reflect the on-
ground investment environment.
Based on this index, states can gain valuable insights into how
they perform on parameters critical to investors, allowing them
to identify areas of strength and weakness. Additionally, the
index will enable states to understand best practices from their
peers, fostering a culture of continuous improvement.
The index has a recurrent nature and is assessed at set intervals.
This is intended to provide states with a clear understanding of
how their actions translate into improvements in both data and
investor perception.
By offering a fair and transparent assessment framework,
this study will promote healthy competition among states,
encouraging them to enhance their investment climate and
attract more investments.
68Investment Friendliness Index
State profiles 69
Chapter 4:
State profiles
State profilesInvestment Friendliness Index 70 67
Andaman and Nicobar Islands
Area: 8,249 sq km
GSDP per capita: Rs 212,576
Agriculture share of GVA (FY23): 4.2%
Industry share of GVA (FY23): 19.6%
Services share of GVA (FY23): 76.2%
FDI inflow (FY24): Not available
*
Key industries: Food processing
Key enable rs
•Institutional environment
•Infrastructure
Data score (65) Survey score (35)
Areas needing improvement
• Government policy
Key performance indicators
• GSDP per capita
Indicators for improvement
• Share of renewables in power
generation capacity
Overall
Rank
Score
Category
rank34/36
30.2
C | 6/7
State category
L – Large state
C – City state
N – Northeastern/hilly state
17.6 12.6
* “Not available” indicates nonavailability of published data
State profilesInvestment Friendliness Index 66 71
Andaman and Nicobar Islands attain an overall score of 30.2, placing it sixth among City States/
Union Territories and 34th overall. The islands are renowned for their peaceful culture and low crime
rate. However, there are notable opportunities for improvement within the government policy.
Key factors driving the State score
•The score Andaman and Nicobar Islands is afunction of its performance in the institutional
environment pillar and infrastructure. However,
its overall score is weighed down by its
performance in the government policy pillar
•Andaman and Nicobar Island’s performance inthe institutional environment pillar is driven
by a relatively low crime rate (~47% lower thanthe average crime rate for Union Territories and
city states)
•In the infrastructure pillar, Andaman and Nicobar
does well on account of its strong airportcapacity. It scored 32 % higher than its category
average in airport capacity per capita
•In the business climate pillar, Andaman and
Nicobar Islands demonstrate commendableperformance, with new companies registered
in fiscal 2024 accounting
for 15.7% of existing
companies (~33% above the average for Union
Territories and city states). Its GSDP per capita
is Rs 212,576 compared with a
category average
of Rs 230,037
• Additionally, Andaman and Nicobar Islands has 79 commercial bank offices, resulting in 20.47 commercial bank offices per one lakh population compared with 31 for the category, supporting financial inclusion and economic activity despite its relatively low population
• In the government policy pillar, there is significant scope for improvement in indicators, such as MoU conversion rate and capex incentive disbursed, which is leading to a relatively lower score in this pillar
• Within the resources pillar, indicators that warrant improvement include vocational training capacity, where the region ranks 31st, and low STEM enrolment, which stands at just 14% of total higher education enrolment. Both aspects are essential for developing a skilled workforce and fostering innovation
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
31%
7%
37%
58%
28%
39%
31%
27%
Best statePillar average
State profilesInvestment Friendliness Index 72 69
Andhra Pradesh
Area: 160,205 sq km
GSDP per capita: Rs 161,243
Agriculture share of GVA (FY23): 11.8%
Industry share of GVA (FY23): 29.6%
Services share of GVA (FY23): 58.6%
FDI inflow (FY24): $92.13 million
Key industries: Food processing, chemicals,
pharmaceuticals
Key enable rs• Good infrastructure
• Abundance of resources
Data score (65) Survey score (35)
Areas needing improvement
•Financial health
Key performance indicators
• Low electricity downtime
• High STEM enrollment
Indicators for improvement
•State’s total outstanding
liabilities/GSDP
Overall
Rank
Score
Category
rank8/36
48.7
L | 6/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
26.5 22.2
State profiles
73
State profilesInvestment Friendliness Index
68 73
Andhra Pradesh has an overall score of 48.7, ranking sixth in the large state category and
eighth overall. Andhra Pradesh’s score is driven by its performance in infrastructure,
highest digital transactions per capita across all states and UTs, and the resources pillar,
with further improvement to the score weighed down by a below-average score in the
financial health pillar.
Key factors driving the State score
•Andhra Pradesh ranks 6th in the large category
of states on account of the strength of its infrastructure and resources, but weighed down by its low financial health where it scores lower than the pillar average
•Its strong digital infrastructure is evident in
the highest digital transactions per capita
(approximately 18, compared with the average of
just 4.8 among the large states)
•Low electricity downtime, with an average power supply of 23.71 hours compared
with the category average of 22.7 hours and
T&D losses of 14% compared with ~18%, aids its performance in the infrastructure pillar
•Andhra Pradesh does well in both natural as well
as human resources, accounting for a 10th of
India’s non-metallic production (by value) and
the 5th highest renewable resource potential share (approximately 8%) among states. Notably,
Andhra Pradesh has the highest share of STEM enrolments as a percentage of higher education enrolments (48% as of fiscal 2022)
•The State’s institutional environment score aligns with the national average, indicating mixed performance in perception indicators. Scores related to the perception of the severity of labour disruptions and the regulatory environment are below the pan-India average,
while scores relating to the consistency of state policies and grievance redressal mechanisms are above the pan-India average
•The score in the financial health pillar is impacted by the State’s outstanding liabilities
amounting to around 35% of its GSDP, 13% higher than the average of large states, and
its fiscal deficit at more than twice the target set by the 15th finance commission
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
48%
31%
64%
65%
58%
78%
48%
34%
Best statePillar average
Key factors driving the State score
• Andhra Pradesh ranks 6th in the large category
of states on account of the strength of its
infrastructure and resources, but weighed down
by its low financial health where it scores lower
than the pillar average
• Its strong digital infrastructure is evident in the highest digital transactions per capita (approximately 18, compared with the average of just 4.8 among the large states)
• Low electricity downtime, with an average power supply of 23.71 hours compared with the category average of 22.7 hours and T&D losses of 14% compared with ~18%, aids its performance in the infrastructure pillar
• Andhra Pradesh does well in both natural as well as human resources, accounting for a 10th of India’s non-metallic production (by value) and the 5th highest renewable resource potential share (approximately 8%) among states. Notably, Andhra Pradesh has the highest share of STEM
enrolments as a percentage of higher education enrolments (48% as of fiscal 2022)
• The State’s institutional environment score aligns with the national average, indicating mixed performance in perception indicators. Scores related to the perception of the severity of labour disruptions and the regulatory environment are below the pan-India average, while scores relating to the consistency of state policies and grievance redressal mechanisms are above the pan-India average
• The score in the financial health pillar is impacted by the State’s outstanding liabilities amounting to around 35% of its GSDP, 13% higher than the average of large states, and its fiscal deficit at more than twice the target set by the 15th finance commission
State profilesInvestment Friendliness Index 74 71
Voices from the ground
Areas of strength
• The Visakhapatnam port is an advantage for
seafood exporters, offering efficient cargo
handling and access to international routes,
making it an attractive location for businesses
in the sector.
• Andhra Pradesh’s seaports are notable for their strong throughput and expansion plans, while the railway network provides solid freight support, despite some gaps in corridors and coverage.
• The State is home to a range of modern industrial parks, including Sri City, Jawaharlal Nehru Pharma City and APIIC estates, which offer ready-to-use infrastructure, reliable utilities and strong connectivity, making them prime destinations for high-value investments.
• Andhra Pradesh has well-developed cold storage and warehousing infrastructure, which is essential for the seafood industry, with good availability, although costs are slightly higher than in some other locations.
Areas of focus
• While major IT hubs like Vizag have good connectivity, the quality of internal roads in
tier-2 and 3 locations could be improved, with more consistent maintenance and upgrades to ensure smooth transportation.
• Airports in the State may benefit from enhancements to their cargo facilities and route networks, as well as efforts to improve profitability, to provide more comprehensive transportation options for businesses.
• Although policies are generally clear and investor-friendly, the disbursement of financial incentives could be streamlined to reduce bureaucratic delays and enhance business confidence.
• The process of obtaining utility connections, such as power and water, could be made more efficient, with reduced requirements for multiple clearances and improved inter- departmental coordination.
• While Andhra Pradesh has measures in place for disaster management, further investments in infrastructure resilience, early warning systems, and business continuity planning could help mitigate the impact of natural disasters on businesses.
• Andhra Pradesh has stable pro-industry policies, with clear incentives and investment frameworks. However, changes with political cycles and gaps in implementation affect long- term predictability.
State profilesInvestment Friendliness Index 70 75
Arunachal Pradesh
Area: 83,743 sq km
GSDP per capita: Rs 148,056
Agriculture share of GVA (FY23): 10.8%
Industry share of GVA (FY23): 26.8%
Services share of GVA (FY23): 62.4%
FDI inflow (FY24): Not available
*
Key industries: Beverages, basic metals
Key enable rs
•Environment resilience
•Favourable institutional environment
Data score (65) Survey score (35)
Areas needing improvement
•Business climate
•Financial health
Key performance indicators
• Ease of obtaining construction permits
• Perceived consistency in State policies
Indicators for improvement
• Exports as a % of GSDP
Overall
rank
Score
Category
rank30/36
37.5
N | 9/12
State category
L – Large state
C – City state
N – Northeastern/hilly state
19 18.5
* Not available” indicates nonavailability of published data
State profilesInvestment Friendliness Index 76 73
Arunachal Pradesh achieves an overall score of 37.5, ranking 9th among northeastern/hilly
States and 30th overall. This score is primarily driven by environment resilience within the
State and effective institutional performance. However, there are significant areas for
improvement within the business climate and financial health pillars.
Key factors driving the State score
•Arunachal Pradesh’s overall score is driven
by a healthy performance in the institutional
environment and regulatory ease pillars, while
the financial health and business climate
pillars present opportunities for improvement
•The State’s performance in the institutional
environment pillar is supported by a favourableregulatory environment (67 compared with thecategory average of 61) and a low cyber-crimerate of 1.01 offences per lakh population (~50%lower than the average for hilly and northeastern
States), contributing to a secure and stable
business setting
•The State demonstrates strong performance
in the regulatory ease pillar, particularly in
utility connections for electricity and water,
achieving perception scores that are 9 pointshigher than the category average
•The State’s performance in the financial
health pillar presents scope for improvement.
Its total outstanding liabilities as a percentage
of GSDP was approximately 56% in fiscal
2024 (~84%
higher than the average for hilly and northeastern
States). Further, the
State’s gross fiscal deficit
as a percentage of GSDP was 72% higher than
the average in its category.
• The State can enhance its business climate pillar by improving GSDP per capita, which stands at Rs 148,056 and ranks 19th among all States and UTs by focusing on tourism, agriculture and food processing. It can improve bank credit to industry, which is only at 3.7% of GSDP (below the ~5% average for hilly and northeastern States)
Voices from the ground
Areas of strength
•The frequency of voltage fluctuation is
remarkably low, and power outages are rare,
ensuring a reliable and stable power supply
•Vast pool of skilled and unskilled labour with
a diverse range of skills, readily available in
various industrial sectors
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
I
nstitutional environment
Financial health
Environment resilience
31%
18%
50%
65%
16%
76%
41%
31%
Best statePillar average
State profilesInvestment Friendliness Index 72 77
Assam
Area: 78,438 sq km
GSDP per capita: Rs 100,322
Agriculture share of GVA (FY23): 8.8%
Industry share of GVA (FY23): 47.6%
Services share of GVA (FY23): 43.6%
FDI inflow (FY24): $0.23 million
Key industries: Coke and refined petroleum
products, chemicals
Key enable rs •Strong government policy
•Favourable institutional environment
Data score (65) Survey score (35)
Areas needing improvement
• Business climate
Key performance indicators
• Low interest burden
• Minimal impact of labour disruptions
Indicators for improvement
• Exports as a percentage of GSDP
• Incubators per lakh population
Overall
Rank
Score
Category
rank14/36
47.3
N | 2/12
State category
L – Large state
C – City state
N – Northeastern/hilly state
25.9 21.4
•Resources
State profilesInvestment Friendliness Index 78 75
With an overall score of 47.3, Assam ranks second among northeastern and hilly states
and 14th overall. This score is largely driven by strong government policy and a favourable
institutional environment, with minimal impact from labour disruptions. However, there
is scope for improvement within the business climate and resources pillar .
Key factors driving the State score
•Assam has performed well on the government
policy and institutional environment
parameters, and maintained a respectable
position within the financial health pillar.
However, its overall investment appeal
is limited by its weak performance on the
resources climate and business parameters,
highlighting areas of potential growth
•The government policy outperformance can
be attributed to the strong capex incentives
disbursed as a percentage of its total industrial
capex in fiscal 2024 (nearly five times the average
for hilly and northeastern states)
•Assam also scores well on its focus on improving
road infrastructure, with the State allocating an
average of 8% of its annual expenditure to roads
between fiscals 2019 and 2024, compared with a
pan-India average of 3%
•Assam’s focus on education is evident from
an average of 18% allocation of its budget toeducation over fiscals 2019-2024, compared
with the average of ~12% for hilly and
northeastern States. Despite the allocation to
education, scope for improvement exists in its
ability to produce technical workforce, as new
technical workforce added as a percentage of
population is only 0.01%, compared with a pan-
India average of 0.014%
•Assam’s financial health pillar is supported by
a controlled level of interest payments, at 2.8%
of GSDP (24% lower than the average across
hilly and northeastern states), reflecting
prudent fiscal management and stability in the
State’s public finances
•Institutional environment is another pillar
in which Assam performs well, driven
by low
severity of labour disruptions and perceived
consistency in State policies
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
35%
49%
64%
67%
69%
70%
43%
32%
Best statePillar average
State profilesInvestment Friendliness Index 74 79
• The State can further strengthen its
infrastructure pillar by increasing the number
of international airports, as it currently has
just one with international operations. Assam
also ranked 21st among all States and UTs in
cold storage capacity relative to manufacturing
GVA, indicating scope for improvement in
supply chain support. Additionally, the State
ranked 35th (second last) in the availability
of industrial area for allotment as a share of
total land, as per the India Industrial Land
Bank (IILB) database, highlighting a significant
lost opportunity to attract new investments
and industries
• Business climate presents opportunities for enhancement, with GSDP per capita at approximately Rs 1 lakh (33% lower than average GSDP per capita for hilly and northeastern states), indicating scope for increased economic output. Exports as a percentage of GSDP stood at 1.2% in fiscal 2024, suggesting potential to strengthen the State’s global market integration. The presence of only two incubators per lakh population points to room for further development in entrepreneurship and innovation infrastructure. Additionally, private equity and venture capital inflows stood at Rs 158.4 million in fiscal 2024 (PE and VC inflows as a percentage of GSDP are ~42% lower than the average for hilly and northeastern states), underscoring the
need to attract greater investment to
support business growth
Voices from the ground
Areas of strength
• The State has strong transportation and digital infrastructure, supporting industrial operations. Road construction quality is good, and rail connectivity along with freight-carrying capacity is robust, enabling efficient movement of goods across regions. The digital infrastructure is also reliable, allowing industries to operate with modern, technology-driven processes
• The region has attracted several large companies, along with cooperatives that have established successful manufacturing operations. The presence of these enterprises underscores the region’s growing industrial ecosystem. Their investments signal confidence in the business environment and
contribute to broader economic activity and
employment generation
• The State’s policy framework is welcoming and provides attractive incentives for new and expanding industries. Consistently pro- investment policies have supported the establishment of multiple units, offering competitive advantages to businesses looking to scale operations
• Key regulatory processes such as land allotment, environmental clearances, and construction permits are transparent and efficient. The land allotment process is viewed as highly transparent, while environmental clearances are processed in a timely manner. The construction permit process also operates with clarity, helping industries achieve quicker project execution
Areas of focus
• Road quality in certain areas can be further improved. Strengthening road conditions across more regions would enhance connectivity
and support smoother logistics and
workforce movement
• Air connectivity to tier-II and tier-III cities offers room for improvement. Expanding flight routes and improving airport infrastructure in these locations would make travel and cargo movement more efficient, benefiting businesses operating beyond major urban centres
• Power supply reliability needs to be strengthened. Frequent interruptions affect overall development, not just industrial operations. More consistent and resilient power infrastructure would support long-term growth across sectors
• Industrial parks can be upgraded further to improve their functionality. Enhancements around infrastructure, utilities, and facilities within industrial parks would help create a more competitive and industry-ready environment
• Additional warehousing capacity would benefit businesses across sectors. Expanding storage infrastructure, particularly in key industrial clusters, would support smoother supply chain management and reduce logistical bottlenecks
State profilesInvestment Friendliness Index 80 77
• Availability of skilled workers can be improved
through targeted, industry-relevant skilling
initiatives. Developing focused programs that
align with industry needs would help address
labour shortages and ensure a steady pipeline of
trained talent.
• The single-window system can be made more efficient. Streamlining processes, improving digital responsiveness, and easing procedural requirements would make approvals more seamless for investors.
• Utility connections can be more easily accessible and faster to obtain. Reducing the time taken for electricity, water, and other essential connections would facilitate quicker project initiation and improve ease of doing business.
State profilesInvestment Friendliness Index 76 81
Bihar
Area: 94,163 sq km
GSDP per capita: Rs 44,705
Agriculture share of GVA (FY23): 10.4%
Industry share of GVA (FY23): 22.1%
Services share of GVA (FY23): 67.5%
FDI inflow (FY24): $0.16 million
Key industries: Coke and refined petroleum
products, food processing
Key enable rs• Good infrastructure
• Abundance of resources
Data score (65) Survey score (35)
Areas needing improvement
• Business climate
Key performance indicators
• High railway density
• Strong spending on education
Indicators for improvement
• Patent applications filed
Overall
Rank
Score
Category
rank26/36
41.2
L | 17/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
21.8 19.4
State profilesInvestment Friendliness Index 82 79
Bihar has an overall score of 41.2, ranking 17th among large states and 26th overall. This score
is primarily driven by its performance in the infrastructure and resources pillars. However, there
is significant scope for improvement within the business climate and financial health pillar .
Key factors driving the State score
•Bihar is an emerging performer state, with good
performance on the infrastructure and resources
parameters, and scope for improvement within
business climate
and financial health
•It is among the top performers on road density
and rail density. Despite occupying only 2.9% of
the country’s land mass, Bihar accounts for 4%
of national highways, 8% of rural roads and 5.7%
of the rail track length of the country
•Bihar also performs well on cold storage capacity,
scoring 23% above the category average
•In the resources pillar, Bihar’s performance
is driven by strong government spending on
education as a percent of its GSDP (46% higher
than the average for large states)
•There are significant opportunities for
improvement in Bihar’s business climate, with
GSDP per capita at just Rs 44,000 (~72% lowerthan the average for large states), indicating
scope for greater economic output. Patent
applications filed as a percentage of active
companies stood at just 0.48% in fiscal 2023
(average for large states was ~3.6%), highlighting
potential to foster innovation
•Bank credit
to industry stands at about 6.7%
of GSDP, suggesting room to enhance financial
support for businesses. Additionally,
Bihar
ranks 32nd in the share of medium and small enterprises within its MSME base, indicating the
need to develop a more dynamic and resilient industrial ecosystem
•A near 500 bps higher than the average total outstanding liabilities/GSDP across the 36 states
and UTs indicates an area for improvement in the
financial health pillar
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
36%
23%
58%
64%
57%
55%
44%
26%
Best statePillar average
State profilesInvestment Friendliness Index 78 83
Voices from the ground
Areas of strength
• Bihar has made significant strides in improving
its electricity and water infrastructure, with a
notable enhancement in the availability and
reliability of these essential services.
• Bihar has simplified its environmental clearance process, reducing bureaucratic hurdles and enabling faster project approvals.
Areas of focus
• Bihar lacks air connectivity to Tier 2 & 3 cities, hindering accessibility.
• While the condition of electricity in Bihar is satisfactory, there is still a need for further improvement to ensure reliable and uninterrupted 24/7 power availability.
• Bihar currently lacks a dedicated industrial park or a well-established industrial infrastructure, which is a significant deterrent to attracting large-scale investments, fostering
entrepreneurship, and driving economic growth in the State. The absence of a robust industrial ecosystem hinders the development of key sectors, such as manufacturing, logistics, and exports, thereby limiting the State’s economic potential.
• Bihar’s digital infrastructure can be strengthened to improve connectivity, communication, and overall digital ecosystem.
• Investor confidence in Bihar is hindered by concerns over safety and security, which deters potential investors from committing investments in the State. The perception of inadequate law and order, coupled with instances of crime and unrest, creates a risk-averse environment that makes it challenging for Bihar.
• The limited job opportunities in Bihar have a notable impact on the overall quality of life for its residents.
• The land allotment process in Bihar is often complex and challenging, involving lengthy procedures and bureaucratic hurdles
State profilesInvestment Friendliness Index 84 81
Chandigarh
Area: 114 sq km
GSDP per capita: Rs 338,816
Agriculture share of GVA (FY23): 0.0%
Industry share of GVA (FY23): 9.1%
Services share of GVA (FY23): 90.9%
FDI inflow (FY24): $30.88 million
Key enable rs
• Good infrastructure
• Abundance of resources
Data score (65) Survey score (35)
Areas needing improvement
•Institutional environment
•Business climate
Key performance indicators
• Low power cost
• High technical workforce inflow
Indicators for improvement
• Crime rate – Economic crimes
Overall
Rank
Score
Category
rank16/36
47
C | 3/7
State category
L – Large state
C – City state
N – Northeastern/hilly state
24.9 22.1
State profilesInvestment Friendliness Index 80 85
With an overall score of 47, Chandigarh ranks third among City States/Union Territories and 16th
overall. This score is largely
driven by its strong performance in the infrastructure and
resources pillars, supported by a high inflow of tech workforce. However, there is notable scope
for improvement within the institutional environment and business climate pillar .
Key factors driving the State score
•Chandigarh excels in the infrastructure pillar,ranking first among all states and UTs, and
demonstrates strong performance in resources.However, its overall score is weighed down bycomparatively weak performance in businessclimate and institutional environment
•Chandigarh’s top ranking in the infrastructurepillar is supported by it topping rail densityacross states and UTs. The city also offers a
low industrial power cost (11% lower than
the
average for UTs and city-states), enhancing
its attractiveness for businesses. Additionally,
strong 4G and 5G penetration is reflected in
a high number of BTS, with nearly 31 BTS per
square km (2.5 times the
average for UTs and
states), ensuring robust digital connectivity
• The city’s strong performance in the resources
pillar is demonstrated by its first rank across
all states/UTs in the addition of new technical
workforce as a percentage of population (2.5
times the average for UTs and city-states)
• Workforce participation is notable, with 2.42% of the population entering the workforce annually as graduates and postgraduates, which is 92% higher than the average for UTs and city-states
• In the business climate pillar, Chandigarh ranks 29th on the ATL indicator with just 22 labs, and new companies registered in fiscal 2024 accounted for only 7% of total businesses in the State (vs the UT and city-state average of 11.75%). Additionally, Chandigarh ranks 33rd on the startups registered indicator, reflecting a modest number of startups compared with the total number of companies. These areas present scope for improvement in fostering innovation and new business growth
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
42%
26%
63%
64%
47%
44%
60%
31%
Best statePillar average
State profilesInvestment Friendliness Index 86 83
•In the institutional environment pillar, the city
faces challenges with a crime rate of 29 economic
offences per lakh population (37% higher than
the average for UTs and city-states) and issues
within the regulatory environment, both of which
present opportunities for improvement
Voices from the ground
Areas of strength
• Chandigarh boasts a workforce that is notably
skilled, with both unskilled and skilled labour
being better than in many other cities across
India
• The law enforcement agencies in Chandigarh are well-positioned, demonstrating a strong presence
• The power supply in Chandigarh is commendable. The electricity department operates efficiently, ensuring reliable service for residents and businesses alike
Areas of focus
• Connectivity between old and new airport terminals can be improved
• To improve the airport experience, it is recommended that the government reopen the old terminal for domestic flights without delay. This action would help decongest the current facility and restore efficient service for travellers. Furthermore, the new terminal should be dedicated solely to international operations, which would enhance immigration and customs services to align with global standards.
State profilesInvestment Friendliness Index 82 87
Chhattisgarh
Area: 135,192 sq km
GSDP per capita: Rs 120,067
Agriculture share of GVA (FY23): 9.0%
Industry share of GVA (FY23): 52.8%
Services share of GVA (FY23): 38.2%
FDI inflow (FY24): $50.5 million
Key industries: Basic metals, non-metallic
mineral products
Key enable rs •Abundance of resources
•Environment resilience
Data score (65) Survey score (35)
Areas needing improvement
• Infrastructure
Key performance indicators
• High share in coal and lignite
production
• Low seismic threat
Indicators for improvement
• Digital transactions per capita
Overall
Rank
Score
Category
rank12/36
47.5
L | 9/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
23.7 23.8
•Business climate
88
Investment Friendliness Index State profilesInvestment Friendliness Index
88 85
Chhattisgarh attains an overall score of 47.5, ranking 9th among large states and 12th overall.
Key strengths include an abundance of natural resources, such as coal and lignite, and
environment resilience. It has opportunities to improve in the infrastructure pillar,
particularly in digital infrastructure, and business climate pillar
Key factors driving the State score
•Chhattisgarh records a strong performance in the resources and environment resilience pillars. However, there is scope for improvement in the infrastructure and business climate pillars, which could further enhance its overall development and investment attractiveness
•Its strong performance in the resources pillar is driven by its 14% share in the production of metallic mineral and 11.2% in non-metallic (both by value) for fiscal 2024, ranking second and
third, respectively. It constitutes 20% of India’s coal and lignite production and ranks second
•The female worker population ratio stands at 58.1% (~41% higher than the average for large states), positively impacting workforce dynamics
•The State demonstrates strength in the environment resilience pillar with a favourable perception of its
disaster preparedness, scoring nine points higher than large state average, which enhances its overall safety and stability
•Chhattisgarh lagged in the infrastructure pillar, ranking 23rd in airport capacity per capita as of fiscal 2023, pointing to the need of an upgrade in the segment. Its rail network accounts for just 2% of India’s total rail length despite comprising 4% of the country’s land area. Additionally, digital transactions lag at 0.42 per capita (~92% below the average for large states), indicating scope for improvement in connectivity and need for digitalisation of services
•In the business climate pillar, GSDP per capita is ~Rs 1.2 lakh (~24% lower than the average for large states), with the State ranking 24th. Exports remained modest at ~5.5% of the GSDP in fiscal 2024 (~68% below the average for large states). Chhattisgarh ranks 22nd in incubators per capita. Private equity and venture capital
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
53%
25 %
70%
74%
77%
79%
37%
28%
Best statePillar average
Key factors driving the State score
• Chhattisgarh records a strong performance
in the resources and environment resilience
pillars. However, there is scope for improvement
in the infrastructure and business climate
pillars, which could further enhance its overall
development and investment attractiveness
• Its strong performance in the resources pillar is driven by its 14% share in the production of metallic mineral and 11.2% in non-metallic (both by value) for fiscal 2024, ranking second and third, respectively. It constitutes 20% of India’s coal and lignite production and ranks second
• The female worker population ratio stands at 58.1% (~41% higher than the average for large states), positively impacting workforce dynamics
• The State demonstrates strength in the environment resilience pillar with a favourable perception of its disaster preparedness, scoring
nine points higher than large state average, which enhances its overall safety and stability
• Chhattisgarh lagged in the infrastructure pillar, ranking 23rd in airport capacity per capita as of fiscal 2023, pointing to the need of an upgrade in the segment. Its rail network accounts for just 2% of India’s total rail length despite comprising 4% of the country’s land area. Additionally, digital transactions lag at 0.42 per capita (~92% below the average for large states), indicating scope for improvement in connectivity and need for digitalisation of services
• In the business climate pillar, GSDP per capita is ~Rs 1.2 lakh (~24% lower than the average for large states), with the State ranking 24th. Exports remained modest at ~5.5% of the GSDP in fiscal 2024 (~68% below the average for large states). Chhattisgarh ranks 22nd in incubators per capita. Private equity and venture capital
State profilesInvestment Friendliness Index 84 89
investment inflow was just 0.02% of the all-India
PE/VC capital inflow. These indicators highlight
opportunities to stimulate economic growth,
improve the innovation ecosystem and attract
investments
Voices from the ground
Areas of strength
• The legal and associated costs for closing a business in Chhattisgarh are competitive, which can provide reassurance to investors and entrepreneurs considering their exit strategies
• From a power supply perspective, Chhattisgarh benefits from a surplus of electricity, which is available to industries at reasonable prices. This reliable energy supply is a significant advantage for businesses operating in the State
Areas of focus
• The single-window clearance facility faces challenges, which may hinder the efficiency of business operations in the State
• Despite approval from the Centre, the implementation of e-documentation has not yet materialised, which if done, could streamline processes for businesses
• The condition of roads along the borders of Chhattisgarh with neighbouring states, including Jharkhand, may pose challenges for the transport system and affect logistics for industries
• The digital infrastructure requires enhancement, as it currently does not meet the needs of businesses reliant on digital capabilities. The absence of a no objection certificate (NOC) for trunk internet capability could become a significant bottleneck for industries operating in the digital space
• While Chhattisgarh is emerging as a developing hub, there is a need for improved skill development and workforce training initiatives. Although efforts are underway to train the workforce, additional support structures will be essential to facilitate the growth and expansion of this hub
State profilesInvestment Friendliness Index 90 87
Dadra and Nagar Haveli and Daman and Diu
Area: 602 sq km
GSDP per capita: Not available
*
Agriculture share of GVA (FY23): Not available
*
Industry share of GVA (FY23): Not available
*
Services share of GVA (FY23): Not available
*
FDI inflow (FY24): $9.24 million
Key industries: Rubber and plastics products,
chemicals, electrical equipment
Data score (65) Survey score (35)
Overall
Rank
Score
Category
rank31/36
37.1
C | 5/7
State category
L – Large state
C – City state
N – Northeastern/hilly state
18.8 18.3
Key enable rs
•Supportive business climate
•Regulatory ease
Areas needing improvement
•Infrastructure
•Financial health
Key performance indicators
• High share of medium and
small MSMEs
Indicators for improvement
• Road density
* ‘Not available’ indicates nonavailability of published data
State profiles
91
State profilesInvestment Friendliness Index
86 91
Dadra and Nagar Haveli and Daman and Diu have attained an overall score of 37.1, ranking fifth
among City States/Union Territories and 31st overall. Strengths include regulatory ease and a
supportive business climate, as indicated by a high share of MSMEs.
However, there are significant opportunities for improvement within the infrastructure
and financial health pillars.
Key factors driving the State score
•The score is driven by the business climate and
regulatory ease pillars but weighed down by
the infrastructure pillar
•In the business climate pillar, it performs strongly
in the proportion of MSEs within the total MSME
base, ranking first among all states and UTs in
this indicator
•Dadra and Nagar Haveli and Daman and Diu does
well in the regulatory ease pillar on account of
ease of obtaining utility connections where it performs better than its category average. The UT also demonstrates good performance with respect to ease of contract enforcement and
access to commercial courts and scores ~ 4
points above its category average
•The UT also demonstrates strength in the resources pillar, with a labour force participation rate of 61%
•STEM enrolment as a percentage of higher education enrolment was 20% in fiscal 2022,
~30% higher than the average for UTs and
citystates
•The UT can improve its performance in the financial health pillar by managing its
interest expenses and fiscal liabilities more prudently
•Under the infrastructure pillar, there is scope for improvement in road density, where the UT
ranks 34th overall. Additionally, 31% of the
UT’s area is available for allotment as industrial area according to the IILB, 8% higher than the category average
Voices from the ground
Areas of focus
•A single window clearance policy must be introduced as the current process is fragmented and time-consuming in providing approvals for businesses and investors
•A shortage of skilled and unskilled labour is prevalent
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
36%
14%
56%
53%
30%
50%
38%
32%
Best statePillar average
Key factors driving the State score
• The score is driven by the business climate and
regulatory ease pillars but weighed down by the
infrastructure pillar
• In the business climate pillar, it performs strongly in the proportion of MSEs within the total MSME base, ranking first among all states and UTs in this indicator
• Dadra and Nagar Haveli and Daman and Diu does well in the regulatory ease pillar on account of ease of obtaining utility connections where it performs better than its category average. The UT also demonstrates good performance with respect to ease of contract enforcement and access to commercial courts and scores ~ 4 points above its category average
• The UT also demonstrates strength in the resources pillar, with a labour force participation rate of 61%
• STEM enrolment as a percentage of higher education enrolment was 20% in fiscal 2022,
~30% higher than the average for UTs and city states
• The UT can improve its performance in the financial health pillar by managing its interest expenses and fiscal liabilities more prudently
• Under the infrastructure pillar, there is scope for improvement in road density, where the UT ranks 34th overall. Additionally, 31% of the UT’s area is available for allotment as industrial area according to the IILB, 8%higher than the category average
Voices from the ground
Areas of focus
• A single window clearance policy must be introduced as the current process is fragmented and time-consuming in providing approvals for businesses and investors
• A shortage of skilled and unskilled labour is prevalent
State profilesInvestment Friendliness Index 92 89
Delhi
Area: 1,483 sq km
GSDP per capita: Rs 399,013
Agriculture share of GVA (FY23): 0.0%
Industry share of GVA (FY23): 15.5%
Services share of GVA (FY23): 84.5%
FDI inflow (FY24): $6,523.43 million
Key industries: Food processing, RMG
Key enable rs
•Infrastructure
•Sound financial health
Data score (65) Survey score (35)
Areas needing improvement
•Environment resilience
•Government policy
Key performance indicators
• Airport cargo capacity
• Controlled fiscal deficit
Indicators for improvement
• Crime rate
• Air quality index (AQI)
Overall
Rank
Score
Category
rank6/36
49.9
C | 2/7
State category
L – Large state
C – City state
N – Northeastern/hilly state
29.0 20.9
State profilesInvestment Friendliness Index 88 93
Delhi has an overall score of 49.9, ranking second among City States/Union Territories and sixth
overall. The score is driven by its strong performance in the infrastructure pillar, supported by an
adequate cargo capacity and sound financial health. However, there is room for improvement
within the environment resilience and government policy pillars.
Key factors driving the State score
•Delhi demonstrates a strong performance in
the infrastructure and financial health
pillars, with scope for improvement in
the
environment resilience and government
policy pillars, which could enhance its overall
competitiveness
•Delhi’s infrastructure pillar is supported by
its second rank on airport cargo capacity relative
to manufacturing GVA, and an extensive rail
route
network of 184 km despite its small land
area
•T&D losses stood at ~12% in fiscal 2023
(13%lower than the average for city states
and UTs).
Delhi maintained an average of
24 hours of power supply (ranking first
among UTs and city states), indicating virtually
no downtime. These
factors ensure efficient
connectivity and reliable
power supply for
businesses and residents
•In the financial health pillar, Delhi benefits
from outstanding liabilities at just 5.2% of
its
GSDP
(significantly lower than the average of 9.4%
f
or UTs and city states) and a gross fiscal deficit
of only 0.7% of GDP (57% below the average for
city states and UTs). This reflects prudent fiscal
management and contributes to overall financial
stability
•Delhi’s performance in the government policy
pillar is weighed down by its underperformance
in indicators such as incentive allocation and
capex incentive disbursed
•In the institutional environment pillar, Delhi
faces challenges pertaining to
a crime rate of
30 offences per
lakh population (43% above the
average of UTs and city states of 21)
•Delhi shows significant scope for improvement
in the environment resilience pillar. The city’s
AQI fell in
the poor range (201-300) for 130
days and in the very poor range (301-400)
for 66 days during 2022
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
34%
18%
59%
62%
100%
39%
56%
47%
Best statePillar average
State profilesInvestment Friendliness Index 94 91
• Additionally, there are concerns regarding
regulatory environment and perceptions of
the effectiveness of its grievance redressal
mechanisms, where its perception scores
are equal to the category average for both
indicators. Strengthening these areas can
enhance governance and the overall investment
environment
Voices from the ground
Areas of strength
• The railway network has undergone significant improvements, making it a reliable option for transporting containers. Earlier, wagons would often get stuck at intermediate stations for extended periods, causing disruptions. The current system allows for smooth transportation. The online platform has
also added transparency and efficiency
• Power supply is stable with no major outages and the digital infrastructure is robust, offering high-speed connectivity and wide coverage
Areas of focus
• Delhi NCR’s road network is well-developed, with most roads well-maintained by the government. However, certain stretches, particularly in outer Delhi, require improvement. Waterlogging on highways and roads during monsoon remains a significant concern
• Creation of industrial parks often focused on securing grants rather than functionality remains a concern. Many remain non-operational. A better approach would be for the government to provide land parcels with basic infrastructure, allowing industries to build customised facilities. This issue needs attention to support industrial growth in the region
State profilesInvestment Friendliness Index 90 95
Goa
Area: 3,702 sq km
GSDP per capita: Rs 439,596
Agriculture share of GVA (FY23): 2.1%
Industry share of GVA (FY23): 53.3%
Services share of GVA (FY23): 44.6%
FDI inflow (FY24): $35.1 million
Key industries: Pharmaceuticals, medicinal,
chemical and botanical products
Key enable rs• Good infrastructure
• Abundance of resources
Data score (65) Survey score (35)
Areas needing improvement
•Institutional environment
Key performance indicators
• High airport capacity
• Significant budget for skilling
Indicators for improvement
• Fiscal liabilities
Overall
Rank
Score
Category
rank4/36
53.1
C | 1/7
State category
L – Large state
C – City state
N – Northeastern/hilly state
28.8 24.3
State profilesInvestment Friendliness Index 96 93
Goa has an
overall score of 53.1, topping City States/Union Territories and ranking fourth
overall. Goa’s strong performance is driven by
its highest scores in the resources and
regulatory ease pillars, with institutional environment being an area of improvement.
Key factors driving the State score
•Ranked first in the city/UT category and fourth
overall, Goa stands out as the top performer
under the resources and regulatory ease
pillar and second under the infrastructure pillar
•It has the highest spending as a percentage of
GSDP on skilling and healthcare investments,
aiding its performance under the
resources pillar.
A high proportion of STEM enrolment (25% of
higher education enrolment is in STEM courses),
which supports a skilled and technology-
oriented workforce, further aids its performance
in resources
•Goa secured the highest rank in the UTs and
city states category in STEM enrolment as a
percentage of total enrolment in higher education
Additionally, Goa ranks high in vocational training
capacity and secured the first rank among UTs
and city states in this indicator
•Its strong performance under the infrastructurepillar can be attributed to its two internationalairports, accounting for 3% capacity of allairports in
India. Its port capacity is 3% of the
total in India, along with dedicated terminals
for handling containers, dry bulk and POL. This
is despite Goa accounting
for only 0.35% of
India’s GDP. The State has the highest share of renewables in its power mix across all states and UTs, while also displaying only 7% of
T&D losses
•Goa can enhance its institutional environment by addressing the impact
of labour disruptions,
which should help create a more stable
and
predictable business environment
•There is scope for improving the fiscal deficit,
with Goa’s deficit at 6.7% of GDP in fiscal 2024,
higher than
that of its peers in the same category
and more than double the range provided by the 15th Finance Commission
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
56%
26%
71%
66%
61%
60%
56%
42%
Best statePillar average
State profilesInvestment Friendliness Index 92 97
• Additionally, strengthening the regulatory
environment could streamline processes and
improve the overall ease of doing business
Voices from the ground
Areas of strength
• Goa boasts of robust transportation network, with well-connected roads and an efficient railway system that enables seamless and reliable movement of goods
• Its power supply is reliable, with minimal outages and manageable voltage fluctuations, providing a stable and consistent energy infrastructure that supports the needs of industries
• It offers ample warehouse storage capacity, strategically located with excellent transportation connectivity, facilitating efficient logistics and supply chain management
• Goa offers a readily available workforce with a diverse range of skills and expertise, providing a strong foundation for businesses to tap into and leverage for their operational needs
Areas of focus
• Although labour strikes are relatively rare, there is still room for enhancement in labour law compliance, particularly through the implementation of more efficient online systems and streamlined dispute resolution processes, which can minimise disruptions and promote a smoother operating environment
• The environmental clearance process is currently hampered by lengthy timelines, cumbersome paperwork and a lack of transparency in costs, highlighting the need for a more streamlined and efficient system, including a simpler online process and faster approval timelines
State profilesInvestment Friendliness Index 98 95
Gujarat
Area: 196,244 sq km
GSDP per capita: Rs 264,232
Agriculture share o
f GVA (FY23): 8.5%
Industry share of GVA (FY23): 50.5%
Services share of GVA (FY23): 41.0%
FDI in
flow (FY24): $7,300 million
Key industries: Coke and refined petroleum
products, chemicals, food processing
Key enable rs
•Good infrastructure
•Sound financial health
Data score (65) Survey score (35)
Areas needing improvement
• Resources
Key performance indicators
• Low turnaround time for ports
• Low debt obligations
Indicators for improvement
• New technical workforce added
each year as a % of population
Overall
Rank
Score
Category
rank1/36
56.6
L | 1/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
33.2 23.4
State profilesInvestment Friendliness Index 94 99
Gujarat has an overall score of 56.6, topping the ranking for the index. Gujarat’s score is driven
by its strong performance across infrastructure, business climate, financial health,
regulatory ease and government policy
pillars, with the areas of improvement being
resources, institutional environment and environment resilience pillars.
Key factors driving the State score
•Gujarat tops the overall rankings, given its strong
performance in infrastructure, business climate,
financial health, regulatory ease and
government policies
•Gujarat’s high rank in infrastructure is driven by
its efficient port operations (lowest turnaround
time weighted by capacity for major and non-
major 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% below the pan-India average.
Electricity downtime is low, with an average
power supply of 23.8 hours a day
(4% higher than
the large states’ average), providing reliable and
uninterrupted power supply for businesses
•Gujarat’s performance in the infrastructure pillar
is driven by its good road density, accounting for
10% of the total length of state highways in India
(nearly four times the pan-India average) and the highest envisaged length of national expressways (635 km). Rail density is also high, comprising 7% of the country’s total rail network, which is 2.5 times the pan-
India average, supporting robust freight and passenger movement. This is despite the State accounting for ~6% of the land area
• Gujarat ranks among the top five states in
business climate, fuelled by high exports at 31%
of India’s merchandise exports, nearly two times
the next highest state, and a robust GSDP growth
rate ranking third overall over fiscals 2019-2024.
Further, the business climate was bolstered by
the presence of 614 ATLs as of fiscal 2025. The
State has 1.24 ATLs per lakh population, which
is ~19% higher than the average of the large
states category. A healthy number of ATLs helps
foster innovation and entrepreneurship across
the State
State’s relative perf
ormance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
42%
51%
66%
69%
96%
74%
55%
46%
Best statePillar average
State profilesInvestment Friendliness Index 100 97
•The State maintains a GSDP per capita of Rs
2,64,232 (67% higher than the average of the
large states) and is ranked fifth among 36 states
and UTs, reflecting robust economic output and
prosperity. Additionally, Gujarat has a healthy
proportion of MSEs
within its MSME base
(ranking fourth in this indicator), contributing to
a dynamic and resilient industrial ecosystem
•Gujarat stands out as one of the top states for its
sound financial health because it had the lowest
fiscal deficit as a percentage of GSDP (2.81%)
among states as of fiscal 2024. Its sound
financial health is also evidenced by its
outstanding liabilities as a percentage of GSDP
that remains well-managed and sustainable at
just around the 18% mark, ~40% below the
average of the large states
•Gujarat has opportunities to enhance its
resources pillar by expanding the technical
workforce added each year as a percentage of
population, which stood at 0.012% as of fiscal
2023. This will support innovation and advanced
manufacturing
•Expenditure on healthcare stands at 5.9% of
total capital expenditure, compared with the
best-performing state at 8.7%, indicating there
is scope to prioritise healthcare investments for
broader development
Voices from the ground
Areas of strength
• Gujarat’s ICDs are well-connected facilitating
the smooth movement of goods
• The State has developed several high-quality industrial parks, such as Sanand, Dholera SIR and GIFT City, which offer plug-and-play infrastructure, excellent utility access, and seamless connectivity to ports and highways, making it easy for businesses to set up and operate
• Gujarat promotes plug-and-play facilities, enabling quick setup of operations with well- developed accommodation and common
amenities, as seen in parks such as Dahej, Jhagadia and Saykha
• The biannual Vibrant Gujarat Summit has been successful in attracting many investment commitments from domestic and international investors, demonstrating the State’s strong institutional support and efficient investor- friendly clearance systems
• The iNDEXTb is highly proactive and investor- friendly, offering single-window clearance, end- to-end facilitation and aftercare support, with a strong reputation among global investors for quick responsiveness and efficient coordination with other departments
• Gujarat is widely recognised for its policy continuity and long-term stability, with industrial and sectoral policies designed with clear multi-year horizons and minimal mid-term changes, providing a predictable environment for businesses
• The State offers a streamlined and transparent process for obtaining NOCs with reasonable costs and timely approvals, facilitating ease of doing business
• Labour disruptions have a low-to-moderate impact on business operations, partly due to government-imposed strike bans on essential services, ensuring a relatively stable labour environment
Areas of focus
• Although private ports operate efficiently, there is a noticeable disparity in the maintenance and management of state-run Gujarat Maritime Board ports, reflecting scope for improvement to ensure seamless cargo handling and transportation
• Gujarat’s workforce productivity and satisfaction with technical skills remain moderate, with scope for improvement through better alignment of training with real-time industry needs, to enhance the overall quality of the workforce.
State profilesInvestment Friendliness Index 96 101
• Providing sector-specific certification and tools
exposure, particularly for the pharmaceutical,
electronics and automotive industries, can help
upskill workers and improve their proficiency in
domain-specific software and technical tools
• While Gujarat’s national highways are well- maintained, the internal roads managed by municipal authorities require improvement as they cause delays, affecting commute times and overall productivity
State profilesInvestment Friendliness Index 102 99
Haryana
Area: 44,212 sq km
GSDP per capita: Rs 248,310
Agriculture share of GVA (FY23): 7.9%
Industry share of GVA (FY23): 33.2%
Services share of GVA (FY23): 58.9%
FDI inflow (FY24): $1,907.79 million
Key industries: Automobile
Key enable rs
• Good infrastructure
• Supportive business climate
Data score (65) Survey score (35)
Areas needing improvement
• Resources
Key performance indicators
• Ample industrial land availability
• Strong PE and VC inflows
Indicators for improvement
• Share of renewables in power
generation
Overall
Rank
Score
Category
rank15/36
47.1
L | 11/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
26.0 21.1
State profilesInvestment Friendliness Index 98 103
Haryana has an overall score of 47.1, ranking 11th in the large state category and 15th overall. The
score is driven by its performance in the business climate and infrastructure pillars, with areas
of improvement in the resources pillar.
Key factors driving the State score
•Haryana leads in terms of industrial area
available for allotment/total
land area of state.
The availability of industrial land for allotment
supports new investments and industrial
expansion
•Haryana has performed strongly in both the
business climate and infrastructure pillars.
However, its overall score is weighed down
by comparatively weak performance in the
resources, regulatory ease and
environment resilience pillars, indicating
areas where focused improvements could
further enhance
Haryana’s investment appeal
•The State’s infrastructure pillar performance is
bolstered by high rail density, ranking seventh in
this metric. The State also performs well in digital
transactions (12.42 digital
transactions per
capita, ~ 2.4x the pan-India average), reflecting
widespread adoption of digital financial services
•The State has the highest private equity/ venture
capital investments as a percentage of GSDP
among all states and UTs, which underscores its
attractiveness to investors and startups. It also
demonstrates strong own tax revenue collection,
which accounts for 12%
of its GSDP, higher
than the pan-India average of 9.8% in fiscal
2024, supporting fiscal stability and public
investment
•Haryana can further strengthen its resources
pillar by improving the female workforce
participation rate, which stood at 23.6% as of
fiscal 2024, below the pan-India level of ~40%.
Additionally, increasing state expenditure
on
education, which was 10.3% of GSDP in fiscal
2023 and ranked 26th among the 36 states
and UTs, would help build a more
skilled and
competitive workforce for future growth
•There is room for improvement in the share of
renewable energy in the State power mix, which
is ~4% below the category average
State’s relative perf ormance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
35%
31%
61%
66%
67%
66%
46%
40%
Best statePillar average
State profilesInvestment Friendliness Index 104 101
Voices from the ground
Areas of strength
• The State’s transport ecosystem supports
industry through regional connectivity. Rail
corridors operate smoothly with consistent
freight capacity.
• The State has a well-developed logistics ecosystem, supported by cold storage, warehousing, and efficient digital infrastructure. Cold storage and warehousing facilities are readily available, supporting sectors that depend on temperature-controlled supply chains and organised storage capacity
• Internet connectivity and the broader digital infrastructure are strong, enabling modern, technology-driven operations
• Utility connections—such as electricity and water—are generally easy to obtain, contributing to a smoother setup process for new and expanding businesses
Areas of focus
• Road quality and overall connectivity can be strengthened further. Improving road conditions and enhancing linkages to key industrial areas would support smoother logistics movement and improve accessibility for businesses operating across the State
• There is scope to upgrade storage infrastructure and improve maintenance around train stations. Additional loading/unloading areas and expanded storage capacity would benefit industries with significant freight requirements. Better upkeep of railway stations would also help streamline cargo handling and multimodal logistics
• Power supply reliability varies across locations, creating room for more consistent service.
While some areas receive stable power, others experience frequent outages. Enhancing grid reliability across all industrial pockets would provide a uniform operating environment for businesses
• Connectivity from industrial parks to major transportation hubs can be improved. Strengthening linkages to airports, ports and major railway junctions would reduce transit time and improve overall logistics efficiency for industries located within these parks
• Greater clarity and communication around the Investment Promotion Agency (IPA) would be beneficial. Improved awareness and easier access to information on available schemes and incentives would help businesses make more informed investment decisions and increase scheme utilisation
• Availability of skilled labour can be enhanced through targeted skilling and industry development initiatives. Some sectors face challenges in sourcing skilled workers, partly due to workforce migration to other states. Focused skilling programmes, along with developing sector-specific infrastructure and opportunities, would help retain talent and support industry growth
• The single-window system can be made more efficient, even though some processes such as construction permits remain transparent. Optimising workflows and improving responsiveness would help streamline approvals and make the overall process more seamless for investors
• Flood-related challenges require long-term mitigation measures. Addressing drainage and water management issues would enhance resilience during heavy rainfall and create a more reliable operating environment for industries
State profilesInvestment Friendliness Index 100 105
Himachal Pradesh
Area: 55,673 sq km
GSDP per capita: Rs
200,030
Agriculture share of GVA (FY23):
7.3%
Industry share o
f GVA (FY23): 46.4%
Services share of GVA (FY23): 46.3 %
FDI in
flow (FY24): $56 million
K
ey industries: Pharmaceuticals,
medicinalchemical and botanical products
Key enable rs
•Favourable institutional environment
•Abundance of resources
Data score (65) Survey score (35)
Areas needing improvement
•Environment resilience
Key performance indicators
• Low crime rate – economic and cyber
• Strong female workforce participation
Indicators for improvement
• Number of landslide events
Overall
Rank
Score
Category
rank18/36
46.1
N | 3/12
State category
L – Large state
C – City state
N – Northeastern/hilly state
23.4 22.7
•Business climate
State profilesInvestment Friendliness Index 106 103
With an overall score of 46.1, Himachal Pradesh ranks third among northeastern and hilly
states and 18th overall. The score is largely driven by its strong performance in the resources
pillar, bolstered by high female workforce participation and robust institutional performance.
However, there is scope for improvement within the environment resilience and business
climate pillar s.
Key factors driving the State score
•The performance of Himachal Pradesh in the
resources and institutional environment
pillars is strong, with scope for improvement
in the business climate and environment
resilience pillars. This could further enhance
the State’s overall investment environment
•The State’s strong performance in the resources
pillar is driven by a notable proportion of people
entering the workforce as a percentage of the
population (1.1% against a category average of
0.8%), a high female worker population ratio of
62.3% (18% higher than the average for hilly and
northeastern states), and a robust labour force
participation rate of 63.3%, which is comfortably
above the average 48% for hilly and northeastern
states
•The State’s strength in institutional environment
is supported by a low cybercrime rate of 1.12
offences per one lakh population (~45%
lower than the average crime rate for hilly and
northeastern states), an effective grievance
redressal mechanism (65 points compared with
the categ
ory average of 61), and a conducive
regulatory environment (68 against 59), all of
which contribute to a stable and supportive
climate for residents and businesses
•In the business climate pillar, Himachal Pradesh
can enhance its performance by increasing
capital expenditure, which was 7.6% of GSDP
in fiscal 2024 (~56% lower than the average for
hilly and northeastern states). FDI inflows were
modest at $56 million in fiscal 2024, ranking
the highest in its category. The share of medium
and small enterprises within the MSME base
was only 0.9%, indicating significant scope
for improvement in investment and industrial
diversification
•In the environment resilience pillar, ~16%of
Himachal Pradesh’s land area falls within
earthquake zones IV and V. The State
experienced 1,561 landslides between 2000
and 2017. These factors highlight the need for
enhanced risk mitigation, disaster preparation
and management and resilience strategies
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
48%
31%
66%
71%
45%
63%
45%
31%
Best statePillar average
State profilesInvestment Friendliness Index 102 107
Voices from the ground
Areas of strength
• The workforce in Himachal Pradesh exhibits a
strong willingness to engage in the wellness
tourism sector, particularly catering to seniors.
This commitment is complemented by the
availability of training facilities, ensuring that the
workforce is well-equipped with the necessary
skills to provide quality services in this growing
industry
• The State has made significant strides in improving its infrastructure to enhance disaster preparedness. Despite the recent tragedies, the authorities demonstrated readiness and resilience in managing these situations effectively
Areas of focus
• Investors pointed out that the rail network needs improvement. Currently, the rail transport system does not fully meet the needs for business logistics. There is a significant need to enhance last-mile connectivity, which is essential for ensuring efficient transport solutions
• Investors also pointed out the absence of well- defined land laws
State profilesInvestment Friendliness Index 108 105
Jammu and Kashmir
Area: 222,236 sq km
GSDP per capita: Rs 110,122
Agriculture share of GVA (FY23): 8.1%
Industry share of GVA (FY23): 26.4%
Services share of GVA (FY23): 65.5%
FDI inflow (FY24): $0.25 million
Key industries: Chemicals, pharmaceuticals,
medicinal and botanical products
Key enable rs •Government policy
•Favourable institutional environment
Data score (65) Survey score (35)
Areas needing improvement
•Infrastructure
•Financial health
Key performance indicators
• Strong pace of new business
registrations
Indicators for improvement
• Electricity downtime
Overall
Rank
Score
Category
rank28/36
40.2
N | 7/12
State category
L – Large state
C – City state
N – Northeastern/hilly state
19.7 20.5
State profilesInvestment Friendliness Index 104 109
Jammu and Kashmir records an overall score of 40.2, ranking seventh among northeastern
and hilly states and 28th overall. Strengths include a favourable institutional environment
and government policy, with infrastructure and financial health emerging as areas for
improvement.
Key factors driving the State score
•Jammu and Kashmir’s score is driven by its
institutional environment and government
policy pillars. However, its overall score is
weighed down by weaker performance in the
financial health and infrastructure pillars
•In the business climate pillar, Jammu and
Kashmir's score is driven by the State’s own
tax
revenue at 15% of GSDP in fiscal 2024,
~70%
above the average for hilly
and
northeastern states
•New companies registered accounted
for 21%
of existing companies in fiscal 2024, placing
Jammu and Kashmir 34% above the average for
the hilly and northeastern states category
•J&K performs well in the government policy
pillar due to healthy incentive allocations
and disbursement. Incentive allocation as a
percentage of its annual state budget was 5.5
times above the average for hilly and northeastern
states. J&K ranks first in its category in terms of
capex incentive allocation as a percentage of
total industrial capex
•In the financial health pillar, interest
payments stand at 7
.13% of GSDP, nearly double
the average for hilly and northeastern states. The
gross fiscal deficit is nearly 9% of GSDP, the
State ranking 29th overall. These figures
highlight the
need for improvement in fiscal
management
•As part of the
infrastructure pillar, average daily
power supply stands at 19.9 hours, indicating
notable electricity downtime compared with
states
having near-continuous supply. 4G/5G
penetration remains low with a BTS density of
0.82
per sq km, highlighting opportunities to
enhance connectivity and service reliability
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
31%
40%
60%
66%
12%
78%
38%
31%
Best statePillar average
State profilesInvestment Friendliness Index 110 107
Voices from the ground
Areas of strength
• Rail connectivity, along with freight carrying
capacity is robust, enabling efficient movement
of goods across regions. The digital infrastructure
is also reliable, allowing industries to operate
with modern, technology-driven processes
Areas of focus
• Obtaining good road conditions has been one of the more challenging aspects of doing business in Kashmir. While some improvements have been made, the experience remains mixed. Frequent damage to roads, poor maintenance and inadequate connectivity to rural areas hinder
smooth transportation, leading to inconvenience
• The region faces a significant shortage of skilled labour, hindering productivity and growth. The workforce in J&K lacks specialised skills, relying heavily on traditional methods. This scarcity of skilled labour is a major challenge, impacting various industries and sectors
• The single window system, designed to streamline processes and facilitate ease of doing business, is not functioning optimally in Jammu and Kashmir. Despite its intended benefits, the system is often circumvented, with manual complaint registration being the norm
State profilesInvestment Friendliness Index 106 111
Jharkhand
Area: 79,716 sq km
GSDP per capita: Rs 86,416
Agriculture share of GVA (FY23): 5.3%
Industry share of GVA (FY23): 44.7%
Services share of GVA (FY23): 50.0%
FDI inflow (FY24): $0.06mn
Key industries: Basic metals, coke and refined
petroleum products
Key enable rs •Abundance of resources
•Sound financial health
Data score (65) Survey score (35)
Areas needing improvement
• Business climate
Key performance indicators
• High coal and lignite production
• Low interest burden
Indicators for improvement
• FDI inflows
Overall
Rank
Score
Category
rank25/36
41.3
L | 16/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
22.6 18.7
State profilesInvestment Friendliness Index 112 109
Jharkhand attains an overall score of 41.3, ranking 16th among large states and 25
th
overall. Strengths include an abundance of natural resources, particularly in coal and
lignite production with opportunities for improvement in the business climate pillar,
especially in terms of attracting FDI.
Key factors driving the State score
Voices from the ground
Areas of strength
•
• Mobile network coverage remains inadequate
in suburban and rural areas of Jharkhand, with
BSNL being the only reliable service provider
in many of these locations, highlighting a
significant gap in telecom infrastructure
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
36%
26%
54%
63%
81%
68%
39%
22%
Best statePillar average
•Jharkhand performs well in the resources
and financial health pillars, while its scores
in the business climate and regulatory pillars
present areas for improvement
•In the resources pillar, the score is driven by
the State accounting for 18.4% of total coaland lignite production in India as of fiscal2024, ranking third, while also contributing5% of national metallic mineral productionby value in the period, ranking 5th across allstates and UTs
•In the financial health pillar, the State
maintains contained interest payments at2.4% of GSDP (below the category average of3.1%) and a gross fiscal deficit at 4% of GSDP(1.7% lower than the category average butabove the 15th Financial Commission limit),reflecting prudent fiscal management
•FDI equity inflow has been low in Jharkhand,
which is ranked 14th among 17 states on thisparameter in the large state category
The intracity roadways managed by the Tata Group ease are well-maintained, whereas those maintained by the National Highways Authority of India and Jharkhand government need improvement
State profilesInvestment Friendliness Index 108 113
Karnataka
Area: 1,91,791 sq km
GSDP per capita: Rs 2,39,394
Agriculture share of GVA (FY23): 6.3%
Industry share of GVA (FY23): 24.8%
Services share of GVA (FY23): 68.9%
FDI inflow (FY24): $6,571 mn
Key industries: Basic metals, food processing,
coke and refined petroleum products
Key enable rs •Sound financial health
•Supportive business climate
Data score (65) Survey score (35)
Areas needing improvement
•Regulatory ease
Key performance indicators
• Low interest burden
• Strong PE and VC inflows
Indicators for improvement
• Land allotment process
Overall
Rank
Score
Category
rank9/36
48.7
L | 7/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
29.8 18.9
114
Investment Friendliness Index State profilesInvestment Friendliness Index
114 111
Karnataka has an overall score of 48.7, ranking 7th out of 17 states in the large state (L)
category and 9th out of 36 overall. Karnataka’s score is driven by its strong performance in the
business climate pillar, driven by strong PE/VC inflows consistent with it being the home to
India’s Silicon Valley. Its score is dragged down by its below-average score in regulatory ease
and institutional environment.
Key factors driving the State score
•Karnataka shows strong performance in business and has sound financial health. However, institutional environment andregulatory ease pillars weigh on its overall score.
State’s relative performance across pillars
Note: Pillar average and best state metrics are evaluated at a pan-India level
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
45%
35%
52%
58%
80%
74%
41%
47%
Best statePillar average
•Karnataka’s strong performance in the
business climate pillar cements its position as
a dynamic and innovation-driven
economy. The State shows solid economic
performance, with a five-year CAGR of 6.1%,
compared with India’s ~4.8%and a GSDP per
capita of ~Rs 240,000, ranking 7th among
states. Karnataka has substantial export
volume as a percentage of GSDP, with its export
base totalling $30,481 million (fiscal 2025),
accounting for 6% of India’s export for the fiscal.
The state ranks fourth among large states in
terms of total export value.
•The robust performance in the business climate
pillar is attributed to strong PE/VC investments, as
Karnataka is home to India’s Silicon Valley, with
investments of Rs 1.29 lakh crore, accounting for
~22% of total PE/VC investments in India for 2024.
This further solidifies its status as one of the
country’s foremost innovation and startup hubs.
The State’s vibrant entrepreneurial
•The innovation ecosystem is driven by a robust
network of 798 ATLs across the State, ranking
4th among all states and UTs, and hence the
climate State continues to attract technology-
driven enterprises and startups. Additionally,
Karnataka’s business facilitation environment is
reflected in its strong FDI inflows, amounting to
$6,571 million (almost three times the
average value of $2,217 million for large states
as of fiscal 2024), and an impressive MoU
conversion rate of 99.93% for calendar 2022—
establishing a strong foundation for continued
investment and enterprise growth.
Key factors driving the State score
• Karnataka shows strong performance in business
and has sound financial health. However,
institutional environment andregulatory ease
pillars weigh on its overall score.
• Karnataka’s strong performance in the business climate pillar cements its position as a dynamic and innovation-driven economy. The State shows solid economic performance, with a five-year CAGR of 6.1%, compared with India’s ~4.8%and a GSDP per capita of ~Rs 240,000, ranking 7th among states. Karnataka has substantial export volume as a percentage of GSDP, with its export base totalling $30,481 million (fiscal 2025), accounting for 7.8% of India’s export for the fiscal. The state ranks fourth among large states in terms of total export value.
• The innovation ecosystem is driven by a robust network of 798 ATLs across the State, ranking 4th
among all states and UTs, and hence the climate State continues to attract technologydriven enterprises and startups. Additionally, Karnataka’s business facilitation environment is reflected in its strong FDI inflows, amounting to $6,571 million (almost three times the average value of $2,217 million for large states as of fiscal 2024), and an impressive MoU conversion rate of 99.93% for calendar 2022— establishing a strong foundation for continued investment and enterprise growth.
• The robust performance in the business climate pillar is attributed to strong PE/VC investments, as Karnataka is home to India’s Silicon Valley, with investments of Rs 1.29 lakh crore, accounting for ~22% of total PE/VC investments in India for 2024. This further solidifies its status as one of the country’s foremost innovation and startup hubs. The State’s vibrant entrepreneurial
State profiles
115
• ecosystem, supported by technology clusters,
skilled talent and enabling policy framework
has made it a preferred destination for investors
seeking high-growth opportunities.
• The State’s sound financial health is due to its well-managed debt, interest and fiscal deficit. Karnataka sustains a low interest burden, with interest payments constituting 2.33% of its GSDP (fiscal 2024), which is lower than that of 25 other states. Further, Karnataka’s gross fiscal deficit was at 4.5% of GSDP as of fiscal 2024, still higher than the target laid out by the 15th Finance Commission, and its total outstanding liabilities at 26.5% of its GSDP, comfortably lower than the large states’ average of 30.3%. This reflects sound fiscal management and disciplined borrowing practices. The State’s ability to contain interest obligations allows greater flexibility in allocating resources toward developmental priorities, strengthening its overall financial position and long-term fiscal sustainability.
• On the regulatory front, investors identified scope for improvement in construction permits, land allotment and use, ease of contract enforcement and access to commercial courts, and business closure. Karnataka, despite being one of India’s leading investment destinations, faces low regulatory ease that could hinder smoother business operations and faster project implementation. There is scope to streamline land allotment and land-use change approvals and to implement time-bound clearances, enabling smoother industrial expansion and new investments.
• Enhancing the efficiency of construction and environmental clearances should support timely execution of large and infrastructure-heavy projects. Complementary improvements in contract enforcement and access to commercial courts can further bolster investor confidence.
• Investors also highlighted the need for improvement in grievance-redressal mechanisms. Where grievance resolution is still evolving toward end-to-end visibility and time-bound closure, projects may experience schedule variability, additional coordination effort, and extended working-capital cycles, which can moderate momentum and investor onboarding.
Key factors driving the State score
Areas of strength
• The State has consistently implemented policies that support industries, giving investors the confidence to invest long-term
• The stability of these policies allows investors to plan investments for 10-15 years, ensuring a secure and predictable business environment
• The transparency in the land allotment process within the Karnataka Industrial Areas Development Board (KIADB) zones has improved significantly, enabling investors to plan expansions with greater confidence
• The government’s clear zoning policies have reduced ambiguity in land usage for manufacturing and warehousing, making it easier to operate
• Karnataka has a track record of stable labour relations, providing a favourable environment for our businesses to thrive
• Karnataka’s digital infrastructure, including the rollout of 5G and fibre connectivity, is strengthening its position as a leader in the IT sector
• The State’s focus on digital infrastructure is expected to further enhance its IT dominance, making it an attractive destination for businesses and investments
Areas of focus
• Bengaluru’s traffic situation, while challenging, can be addressed through targeted infrastructure development and traffic management strategies to improve the overall quality of life and business operations. There is a need for speedy development of the Peripheral Ring Road (PRR) and Metro connectivity to the airport. They have also suggested that the sub-urban rail project, which has not taken off, should be prioritised to reduce traffic on roads and improve overall connectivity
State profilesInvestment Friendliness Index 116 113
• Despite having strong airports, air cargo
handling can be beefed up reducing existing
delays for exporters and improving the growth of
international trade
• Enhancing the city’s infrastructure can also positively impact the perception of global companies and visitors, potentially attracting more investment and talent to the region
• Encouraging the development of industrial parks across various cities in Karnataka can promote regional growth and balance, rather than concentrating development in a single city
• Expanding the availability of plug-and- play facilities beyond select regions can support business growth and development
across the State
• The single window clearance system, although a positive step, can be optimised to reduce processing times, which currently average
at 30 days
• Land acquisition and permits: The companies have suggested that the process of acquiring land and necessary permits can be streamlined to reduce delays and costs associated with repeated requests and prohibitive fees
• The average time to get subsidies from application to disbursement is eight to 10 months, which can be optimised to provide timely support to businesses
State profilesInvestment Friendliness Index 112 117
Kerala
Area: 38,852 sq km
GSDP per capita: Rs 1,90,059
Agriculture share of GVA (FY23): 4.6%
Industry share of GVA (FY23): 28.3%
Services share of GVA (FY23): 6 7.1%
FDI inflow (FY24): $196 mn
Key industries: Coke and refined petroleum products,
food processing, rubber and plastics products
Key enable rs •Good infrastructure
•Environment resilience
Data score (65) Survey score (35)
Areas needing improvement
•Resources
Key performance indicators
• Large share of renewables
• Low seismic risk
Indicators for improvement
• Total outstanding liabilities
Overall
Rank
Score
Category
rank17/36
46.6
L | 12/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
23.8 22.8
118
Investment Friendliness Index State profilesInvestment Friendliness Index
118 115
Kerala has an overall score of 46.6, ranking 12th in the large state category and 17th overall.
Kerala’s score is driven by its performance in infrastructure, driven by the 2nd highest share
of renewables among all 36 states and UTs and environment resilience pillars, with room for
improvement in business climate and resources.
Key factors driving the State score
•Kerala’s 12th rank among large states is driven by its performance in the infrastructure and environment resilience pillars, with room for improvement in business climate and financial health
•Kerala’s score in the infrastructure pillar is driven by its second highest share of renewables in power generation capacity, low
transmission and distribution (T&D) losses of 14% compared with an average of 18.2% for
large states and a stable electricity supply of
23 hours a day compared with the large
states’ average of 22.7 hours
•Kerala has a favourable environment resilience among states, supported by a good air quality index (AQI) in cities such as Kochi,
Kollam and Kozhikode that maintain satisfactory-to-good AQI levels (51–100 and 0–50, respectively) for most days throughout the year, ensuring a healthy urban environment. Additionally, the
absence of any area in earthquake zones V
or IV reduces the State’s exposure to
seismic risks, enhancing its overall safety and investment appeal
•Kerala can further strengthen its business climate by increasing capex, which was at
6% of GSDP as of fiscal 2024. This would support infrastructure and economic growth. Supporting and enhancing the innovation ecosystem would aid in improving the number of patent applications that was 1% of the total number of companies registered in fiscal 2023,
compared with the large states’ average of
3.6%. Additionally, attracting higher FDI inflows
compared with fiscal 2024 levels of $197 million (0.4% of India’s FDI) would help boost investment and diversify Kerala’s economic landscape
•The resource pillar shows scope for improvement. Improving the labour force participation rate, which stood at 41% as of 2024 (lower than the pan-India average of 47%), can unlock greater economic potential and inclusivity
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
37%
26%
66%
66%
54%
78%
50%
31%
Best statePillar average
Key factors driving the State score
• Kerala’s 12th rank among large states is driven
by its performance in the infrastructure and
environment resilience pillars, with room for
improvement in business climate and financial
health
• Kerala’s score in the infrastructure pillar is driven by its second highest share of renewables in power generation capacity, low transmission and distribution (T&D) losses of 14% compared with an average of 18.2% for large states and a stable electricity supply of 23 hours a day compared with the large states’ average of 22.7 hours
• Kerala has a favourable environment resilience among states, supported by a good air quality index (AQI) in cities such as Kochi, Kollam and Kozhikode that maintain satisfactory-to-good AQI levels (51–100 and 0–50, respectively) for most days throughout the year, ensuring a healthy urban environment. Additionally, the absence of any area in earthquake zones V or IV
reduces the State’s exposure to seismic risks, enhancing its overall safety and investment appeal
• Kerala can further strengthen its business climate by increasing capex, which was at 6% of GSDP as of fiscal 2024. This would support infrastructure and economic growth. Supporting and enhancing the innovation ecosystem would aid in improving the number of patent applications that was 1% of the total number of companies registered in fiscal 2023, compared with the large states’ average of 3.6%. Additionally, attracting higher FDI inflows compared with fiscal 2024 levels of $197 million (0.4% of India’s FDI) would help boost investment and diversify Kerala’s economic landscape
• The resource pillar shows scope for improvement Improving the labour force participation rate, which stood at 41% as of 2024 (lower than the pan-India average of 47%), can unlock greater economic potential and inclusivity
State profilesInvestment Friendliness Index 114 119
Voices from the ground
Areas of strength
• Kerala’s roads are clean with good connectivity,
and the wide roads make transportation easy
• The closure procedure for business is relatively easy to complete, with no hidden charges applicable at the time of exit
• The single window system is fast and transparent and is less time-consuming with a highly responsive system, providing good overall user experience
• The available digital infrastructure and IT parks are good
• The State has four international airports that cater to the requirements of the people, with the State-promoted CIAL being exemplary in several traits, including low carbon emissions
Areas of focus
• Labour strikes have an impact on the operational stability and goodwill of business operations
• The availability of storage facilities is limited, which can affect the State’s agricultural sector, particularly for perishable goods like spices and fruits. In the food processing industry, the lack of
proper storage facilities results in a significant amount of fruit decay, with ~40% of the State’s fruit production being affected
•There is a need for cold warehouses to store the
State’s agricultural produce and processed/
semi-processed foods, as well as addressing
logistic constraints
•Underutilised facilities owned by the State or
Central public sector enterprises (PSEs) could
be retrofitted or revamped to supplement the
storage requirements
•The State faces a brain drain, with many skilled
workers migrating to other regions such as Dubai
or other Gulf countries, or to larger Indian cities
like Mumbai
•While plug-and-play facilities are available for IT
start-ups, the infrastructure for other industries
is less developed
•There is a need to establish a hassle-free
environment for starting new initiatives,
with
improved interdepartmental coordination and a
more supportive ecosystem for entrepreneurs
•The success of existing ventures and the
effectiveness of efforts to attract new
investments are closely linked, and addressing
the challenges
faced by existing businesses is
crucial to attracting new investors
State profilesInvestment Friendliness Index 120 117
Ladakh
Area: 59,146 sq km
GSDP per capita: Not available
*
Agriculture share of GVA (FY23): Not available
*
Industry share of GVA (FY23): Not available
*
Services share of GVA (FY23): Not available
*
FDI inflow (FY24): Not available
*
Key industries: Not available
*
Key enable rs
• Resources
Data score (65) Survey score (35)
Areas needing improvement
• Infrastructure
Key performance indicators
• Female workforce participation rate
Indicators for improvement
• Road density
Overall
Rank
Score
Category
rank35/36
27
N | 12/12
State category
L – Large state
C – City state
N – Northeastern/hilly state
1 7.7 9.3
* Not available” indicates nonavailability of published data
State profilesInvestment Friendliness Index 116 121
Ladakh has an overall score of 27, ranking 12th among the northeastern and hilly states and
35th overall. Its strengths include human resources, such as the percentage of students
enrolled in STEM fields and female workforce participation. However, there are significant
opportunities for improvement within the infrastructure pillar, particularly in road development.
Key factors driving the State score
• Ladakh is an emerging state, aided by its
performance in human resources; however, it has
significant scope to improve in the infrastructure
pillar, which is essential for supporting its growth
and development
• Ladakh boasts a female workforce participation rate of 47% in 2024, surpassing the pan-India average of 40%
• In the business climate pillar, Ladakh performs well with respect to the number of functioning commercial bank offices per capita and ranks first in this metric among hilly and northeastern states. It ranks fourth across all states and UTs in the number of startups relative to the number of active companies, reflecting a positive entrepreneurial environment and financial inclusion
• Within the infrastructure pillar, Ladakh ranks 35th in road density. Despite accounting for 2% of India’s land area, its contribution to the total
road network is just 0.12%, signifying an area of improvement, given its geopolitical standing. Additionally, the region ranks 30th in area available for industrial allotment, indicating key opportunities for enhancing connectivity and industrial development
Voices from the ground
Areas of strength
• Labour availability is not a concern, as Ladakh attracts a significant number of migrant workers from other states who are willing to work for competitive wages
Areas of focus
• Road infrastructure can be strengthened further to improve overall connectivity. Enhancing the quality and reach of road networks should support smoother logistics movement and improve accessibility
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional
environment
Financial health
Environment resilience
27%
8%
27%
39%
28%
44%
27%
28%
Best statePillar average
State profilesInvestment Friendliness Index 122 119
Lakshadweep
Area: 32 sq km
GSDP per capita: Not availabl
e
*
Agriculture share of GVA (FY23): Not available
*
Industry share of GVA (FY23): Not available
*
Services share of GVA (FY23):
Not available
*
FDI in
flow (FY24): Not available
*
Key industries: Not available
*
Key enable rs
• Supportive business climate
Data score (65) Survey score (35)
Areas needing improvement
• Infrastructure
Key performance indicators
•Commercial bank branches per capita
Indicators for improvement
• Share of renewables in power
generation
Overall
Rank
Score
Category
rank36/36
24.5
C | 7/7
State category
L – Large state
C – City state
N – Northeastern/hilly state
16 8.5
* Not available” indicates nonavailability of published data
State profilesInvestment Friendliness Index 118 123
With an overall score of 24.5, Lakshadweep ranks seventh among City States/Union
Territories and 36th overall. The islands are known for their peaceful culture and quality of
life. However, there is scope for improvement within the infrastructure pillar.
Key factors driving the State score
• Lakshadweep demonstrates a satisfactory
performance in the business climate pillar;
however, there is scope for improvement in the
infrastructure pillar
• The business climate pillar is supported by a 24% higher-than-category average of functioning offices of scheduled commercial banks per lakh population
• It is a tourism-focused island with a low crime rate, reporting state-wise crime incidents at 6 per lakh population, significantly below the average of 16 across states
• The State-wise count of 4G and 5G BTS increased to 50 in fiscal 2025 from 15 in fiscal 2023, reflecting improved mobile network coverage and connectivity for residents and visitors, which is crucial for communication and accessing digital services
• The share of renewable energy in power generation is lower than that of four out of the six other city-states
Voices from the ground
Areas of strength
• People in Lakshadweep enjoy a good quality of life, characterised by the peaceful and serene environment in the islands
• The disaster management systems in Lakshadweep are satisfactory
Areas of focus
• One of the significant challenges encountered is the frequent refusal from domestic port authorities when seeking space for loading barges. Often, these requests are denied on the grounds that permission is required from Kavaratti and the barge authorities, leading to delays and operational inefficiencies
• There is a pressing need for the implementation of 5G facilities at Kalpeni
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional
environment
Financial health
Environment resilience
25%
8%
24%
37%
25%
36%
25%
25%
Best statePillar average
State profilesInvestment Friendliness Index 124 121
Madhya Pradesh
Area: 308,252 sq km
GSDP per capita: Rs 92,477
Agriculture share of GVA (FY23): 25.4%
Industry share of GVA (FY23): 26.4%
Services share of GVA (FY23): 48.2%
FDI inflow (FY24): $23.59 mn
Key industries: Food products, coke and refined
petroleum products
Key enable rs
•Abundance of resources
•Government policy
Data score (65) Survey score (35)
Areas needing improvement
• Business climate
Key performance indicators
• High share in mineral production
• Consistency in state policies
Indicators for improvement
• Number of commercial bank
branches per capita
Overall
Rank
Score
Category
rank7/36
48.9
L | 5/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
26.3 22.6
State profiles
11 125
State profilesInvestment Friendliness Index
120 125
Madhya Pradesh has an overall score of 48.9, ranking fifth in the large-state category and
seventh overall. Located in the heart of India, Madhya Pradesh serves as a strategic link
between the northern and southern regions of the country. It has made notable progress in
industrial development and infrastructure creation, positioning itself as an emerging
destination for investment. The State's score is driven by strong performance in the
resources and government policy pillars, with business climate being an area of improvement.
Key factors driving the State score
•Madhya Pradesh benefits from a strong foundation of natural and human resources, which has been a key enabler of its economic growth. The State is rich in minerals such as coal, limestone and manganese, providing a critical raw-material base for industries such as cement, steel and energy
•Madhya Pradesh’s contribution to India’s overall mineral output highlights its importance as a mining hub as it accounts for 15.6% of the production of non-metallic minerals in India, ranking second in the country in 2024
•On human resources, the State has been focusing on skill development and technical training to expand its industrial workforce. In 2023, the State added 12,819 new technical workers, compared with an average of around 4,000 across states. This combination of natural-resource availability and an improving talent base positions Madhya Pradesh well for sustained investment and industrial activity
•Madhya Pradesh has demonstrated a favourable institutional environment by prioritising administrative efficiency,
maintaining law and order, and facilitating smooth business operations. The State’s governance framework is marked by relatively low labour disruptions and positive perception scores regarding effective grievance redressal mechanisms
•Madhya Pradesh scored 6 points higher than the category average on perception around consistency in state policies, which is critical for attracting long-term investments
•The number of startups increased to 1,264 in fiscal 2023 from 540 in 2021. However, the count
of incubators per lakh population was 53% lower than the average across large states in fiscal
2023. Additionally, the relatively low number of patent applications filed per enterprise (~48% lower than the average across large states) suggests the State’s innovation ecosystem is still in the development phase and could be improved with focused interventions
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
51%
54%
66%
71%
57%
73%
42%
28%
Best statePillar average
Key factors driving the State score
• Madhya Pradesh benefits from a strong
foundation of natural and human resources,
which has been a key enabler of its economic
growth. The State is rich in minerals such as
coal, limestone and manganese, providing a
critical raw-material base for industries such as
cement, steel and energy
• Madhya Pradesh’s contribution to India’s overall mineral output highlights its importance as a mining hub as it accounts for 15.6% of the production of non-metallic minerals in India, ranking second in the country in 2024
• On human resources, the State has been focusing on skill development and technical training to expand its industrial workforce. In 2023, the State added 12,819 new technical workers, compared with an average of around 4,000 across states. This combination of natural-resource availability and an improving talent base positions Madhya Pradesh well for sustained investment and industrial activity
•
• Madhya Pradesh has demonstrated a favourable institutional environment by prioritising administrative efficiency, maintaining law and order, and facilitating smooth business operations. The State’s governance framework is marked by relatively low labour disruptions and positive perception scores regarding effective grievance redressal mechanisms
• Madhya Pradesh scored 6 points higher than the category average on perception around consistency in state policies, which is critical for attracting long-term investments
• The number of startups increased to 1,264 in fiscal 2023 from 540 in 2021. However, the count of incubators per lakh population was 53% lower than the average across large states in fiscal 2023. Additionally, the relatively low number of patent applications filed per enterprise (~48% lower than the average across large states) suggests the State’s innovation ecosystem is still in the development phase and could be improved with focused interventions
State profilesInvestment Friendliness Index 126 123
• Madhya Pradesh has 11 commercial bank
branches per population, compared with the
average of 19 across states in 2024. This has
implications for financial inclusion and access
to credit, which are essential components of a
robust business environment
Voices from the ground
Areas of strength
• Promotion agencies in Madhya Pradesh are responsive to inquiries and provide accurate information proactively, which enhances the overall experience of businesses
• The single-window system in the State is characterised by its speed, effectiveness and transparency, resulting in a positive user experience for entrepreneurs
• The Government of Madhya Pradesh has implemented a commendable policy of allocating industrial land to actual users, ensuring that land is either utilised for industry setup or surrendered. This policy emphasises that industrial land should be non-transferable
Areas of focus
• There is an opportunity to enhance the industrial park facilities in Bhopal to better support businesses and attract investment
• The condition of roads in the region requires attention, as many are poorly maintained and lack proper drainage planning. This oversight leads to early erosion of the road surfaces. Additionally, uncoordinated repairs for plumbing, electrical and fibre optic lines are frequently conducted shortly after road repairs, resulting in a lack of synchronisation
• Improved airport infrastructure is necessary, with good connectivity to project locations. Establishing airports every 100-150 kilometres would facilitate faster access to these areas. Currently, many states face challenges with airport infrastructure and connecting flights
• The law and order situation in Madhya Pradesh is average, with a notable concern regarding the police force’s adequacy. The State has approximately 138 police officers per 100,000 people, which falls below the national average of 194. Addressing this issue could contribute to improved law and order in the State
State profilesInvestment Friendliness Index 122 127
Maharashtra
Area: 3,07,713 sq km
GSDP per capita: Rs 2,16,710
Agriculture share of GVA (FY23): 6.7%
Industry share of GVA (FY23): 30.0%
Services share of GVA (FY23): 63.3%
FDI inflow (FY24): $15,116 mn
Key industries: Automobile, chemicals, machinery
and equipment
Key enable rs •Sound financial health
•Supportive business climate
Data score (65) Survey score (35)
Areas needing improvement
•Regulatory ease
Key performance indicators
• Low outstanding liabilities as a
percentage of GSDP
• Strong PE and VC inflows
Indicators for improvement
• Number of cyber crimes
Overall
Rank
Score
Category
rank2/36
53.7
L | 2/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
32.0 21.7
State profilesInvestment Friendliness Index 128 125
Maharashtra has an overall score of 53.7, ranking second in both the large-state (L) category and
at the pan-India level. The State’s score is driven by its leading performance in the business
climate pillar, driven by it being ranked the highest for attracting PE/VC share of investments and
in the number of ATLs. Its score is also supported by its
strong performance in the resources and
financial health pillars,
with the infrastructure and regulatory ease being an area of
improvement.
Key factors driving the State score
•Maharashtra is the top performer under the
business climate pillar and ranks among thetop five for resources and financial health
pillars. However , infrastructure and low
regulatory ease weighs down its overall score
•The business climate
score is driven by the
State attracting the highest share of PE/VC investments (35% of the investments in the
country), while also having the
highest number
of A
TLs at 1,033, accounting for 10% of the total
ATLs in India. Maharashtra’s performance in the
business climate pillar is driven by its economic
indicators, featuring a GSDP per capita
of Rs
216,710, which ranks 11th among 36 states
and UTs
•It
is among the top five states in resources as it
has the
highest budget among states for skilling,
while also ranking second in terms of renewable resource potential
•It ranks among the top five in the financial
health pillar due to its lowest fiscal deficit
as a percentage of GSDP among the large
states (3.94% in 2024)
•There is a need for
improvement in airport
capacity relative to the population, as well as in the airport’s cargo
capacity, which currently
stands at 55,200 MT, ranking 13th among all
states. Additionally, the number of international
airports (three)
can be improved when considered
in relation to the size of the State
•The industrial power cost in Maharashtra is ~10.4% higher than the average of all other states and UTs
•Ease of exit, contract enforcement, access
to dedicated commercial
courts and disaster
preparedness
are other areas of focus for
Maharashtra
State’s relative performance across pillars
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
54%
38%
61%
64%
90%
72%
46%
47%
Best statePillar average
State profilesInvestment Friendliness Index 124 129
Voices from the ground
Areas of strength
• The State’s railway network provides excellent
connectivity for cargo, linking major industrial
hubs to ports and facilitating the efficient
transportation of goods
• Maharashtra’s well-developed industrial parks, equipped with good utilities and easy access to transport hubs, make it relatively easy for businesses to set up and operate quickly
• The State boasts strong storage infrastructure, with well-established warehousing and logistics hubs, particularly near ports and industrial corridors, supporting the growth of industries
• Maharashtra’s extensive higher education network, industrial hubs and presence of reputed technical institutes contribute to a strong talent pool, providing businesses with access to skilled and qualified personnel
• The State has demonstrated strong capabilities in workforce availability for wind and solar energy project deployment, construction and operations, with technical institutes focused on clean energy, making it an attractive location for companies in the renewable energy sector
• Maharashtra offers a good quality of life, with a diverse range of cultural and recreational options, making it an attractive destination for businesses and their employees
Areas of focus
• The construction permit process, although facilitated by systems such as AutoDCR, can be
complex and time-consuming due to the need for numerous approvals from various departments, which may hinder timely project execution
• While Maharashtra has a functional single- window system, occasional delays and less streamlined processes can be improved to provide a more efficient experience for businesses
• The quality of roads, particularly in urban areas such as Mumbai, can be improved through investments in maintenance and upgrades, which would aid connectivity and transportation
• Although Maharashtra has good airports in major urban centres, there is a need to enhance connectivity and expand airport infrastructure in smaller cities and towns to support regional economic development
• The development of new seaports and improvement of existing ones can enhance good transportation and support the growth of industries
• The lack of train routes between important industrial cities such as Nashik and Pune can be addressed to improve connectivity and facilitate the transportation of goods
• Maharashtra’s industrial power rates are among the highest in the country, which can be a disincentive for businesses, particularly when compared with other states
• Maharashtra experiences more frequent policy shifts and inconsistent enforcement, which can cause uncertainties and challenges for businesses
130Investment Friendliness Index
Manipur
Area: 22,327 sq km
GSDP per capita: Rs 85,414
Agriculture share of GVA (FY23): 11.8%
Industry share of GVA (FY23): 11.2%
Services share of GVA (FY23): 77.0%
FDI inflow (FY24): Not available*
Key industries: Non-metallic mineral products,
food processing
Key enablers
• Abundance of resources
Data score (65) Survey score (35)
Areas needing improvement
• Financial health
• Government policy
Key performance indicators
• Adequate vocational training
capacity
Indicators for improvement
• Exports as a percentage of GSDP
Overall
rank
Score
Category
rank33/36
32.3
N | 11/12
State category
L – Large state
C – City state
N – Northeastern/hilly state
18.4 13.9
* Not available” indicates nonavailability of published data
State profiles 131
Manipur has an overall score of 32.3, ranking 11th among northeastern and hilly states and
33rd overall. This score is driven by its performance in the resources pillar. However, there are
significant areas for improvement in the government policy and financial health.
State’s relative performance across pillars
Key factors driving the state’s score
• Manipur demonstrates strong performance
in the resources pillar. However, it displays below-average performance across multiple pillars, highlighting opportunities for targeted enhancements to bolster investor confidence and economic resilience
• In human resources, the state performs well in
terms of number of people entering the workforce as a percentage of population (graduates plus post-graduates)—22% above the category average. Its vocational training capacity was 31% above the category average in 2025 through ITIs and skill programmes, supporting a growing talent pool
• With respect to infrastructure, Manipur
performed well in road density (~37% above the pillar average for fiscal 2024). Average availability of power supply was 22.7 hours a day for fiscal 2024 (the average of hilly and northeastern states was 21.9 hours)
• Manipur also performed well in investor
satisfaction with a single window policy, with the perception score being 6 points above the category average
• There are areas for improvement in the
government policy and financial health pillars. The state’s gross fiscal deficit stood at ~11.3% of GSDP in fiscal 2024, ~4% above the category average and ~7% above the limit set by the 15th Finance Commission
39%
9%
40%
54%
38%
50%
31%
23%
Best statePillar average
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
132Investment Friendliness Index
• Low R&D incentives disbursed relative to state
GVA and limited incentive allocations in the
state budget contributed to a subdued score in
the government policy pillar, indicating potential
for expanded support in innovation and industry
promotion
• There is a need to strengthen the business
climate pillar, as the state lags in certain aspects, such as exports
Voices from the ground
• Road infrastructure can be strengthened further to improve overall connectivity. Enhancing the quality and reach of road networks would support smoother logistics movement and improve accessibility for industries and local communities across the state
• Sociopolitical stability can be improved to create a more predictable environment for long-
term investments. Greater consistency and stability in the sociopolitical landscape would help reinforce investor confidence and support sustained economic development
• Additional flight connectivity across the northeast, along with new international routes, would boost economic activity. Expanding domestic connectivity and opening international flights to neighbouring countries such as Bangladesh, Myanmar and Thailand would enhance trade opportunities and significantly support sectors such as medical tourism and cross-border commerce
• Power supply reliability can be improved by reducing load shedding. Minimising load shedding and strengthening the power distribution system would ensure more consistent electricity availability, benefiting industries and households alike
State profiles 133
Meghalaya
Area: 22,429 sq km
GSDP per capita: Rs 95,525
Agriculture share of GVA (FY23): 9.0%
Industry share of GVA (FY23): 20.6%
Services share of GVA (FY23): 70.4%
FDI inflow (FY24): Not available*
Key industries: Non-metallic mineral
products, basic metals
Key enable rs
• High regulatory ease
• Favourable institutional environment
Data score (65) Survey score (35)
Areas needing improvement
• Business climate
• Government policy
Key performance indicators
• Ease of obtaining construction permits
• Perceived consistency in state policies
Indicators for improvement
• FDI inflows
Overall
rank
Score
Category
rank23/36
43
N | 5/12
State category
L – Large state
C – City state
N – Northeastern/hilly state
19.5 23.5
* Not available” indicates nonavailability of published data
134Investment Friendliness Index
Meghalaya has an overall score of 43, ranking fifth among northeastern and hilly states and
23rd overall. This score is driven by significant regulatory ease and a favourable institutional
environment. However, there are significant areas for improvement in the business climate and
government policy pillars.
Key factors driving the state’s score
• Meghalaya’s score is driven by its performance in the institutional environment and regulatory ease pillars. However, there are areas of improvement in the business climate and government policy pillars
• Meghalaya performs strongly in the environment resilience pillar, as no cities fall within Seismic Zones IV or V, and the state has a relatively low exposure to cyclones
• The state maintains moderate air quality, with a weighted average AQI of ~85 (better than the national urban average of more than 100 in 2024)
• The institutional environment pillar is strengthened by a low overall crime rate and low incidence of economic offences (forgery, cheating and fraud) at ~13 cases per lakh population in 2023 (below the national average of 16)
• High investor satisfaction was reported on single-window clearances, environmental approvals, construction permits, and utility connections (electricity and water), supported by the Meghalaya Industrial and Investment Promotion Policy 2024
• The business climate is affected by a low GSDP growth rate of ~3.6% over the last five years, compared with the average of 4.8% across states
• Additionally, the number of active commercial bank branches per lakh population at 13 was below the category average of 19 in fiscal 2024. Exports have remained modest, ranging between $9 million and $11 million annually from fiscal 2021 to fiscal 2024, driven by agricultural products. Meanwhile, FDI equity flow has remained minimal, even when compared with the category average of 0.63% of GSDP
• Airport infrastructure can be improved. Meghalaya lacks an airport with international operations
State’s relative performance across pillars
40%
22%
70%
73%
54%
86%
36%
25%
Best statePillar average
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
State profiles 135
Voices from the ground
Areas of strength
• The state offers strong highway and railway
connectivity, supporting efficient movement of
goods. Highway networks are well-developed,
and railway schedules, along with cargo-
handling capacity function effectively. Together,
they provide reliable multimodal transport
options for industries and help streamline
freight operations
• Power supply is consistent and reliable, with no
significant outages reported. Stable electricity availability supports uninterrupted business operations, particularly for industries requiring continuous production cycles
• Digital connectivity is strong, with good internet
speeds and wide mobile network coverage. This robust digital environment facilitates modern business operations, ensuring smoother communication, data transfer and technology- led processes
• Utility connections are easy to obtain,
contributing to smoother project initiation. Access to essential utilities such as electricity and water is manageable and timely, reducing delays during the setup phase for new and expanding units
• Key approval processes—such as construction
permits and land allotment—are transparent and predictable. Both the construction permit process and the land allotment framework operate with clear procedures, offering businesses greater certainty and improving ease of doing business
Areas of focus
• Road conditions in certain areas can be improved.
Enhancing internal road quality would support smoother transportation and strengthen last- mile connectivity for industries.
• Industrial park infrastructure offers scope
for further development. Upgrading facilities, utilities and internal infrastructure within industrial parks would enhance their effectiveness and better support tenant industries
• Logistics and supply-chain systems can
be strengthened. Improvements in storage, transportation links and handling facilities would help reduce operational bottlenecks and improve overall efficiency
• The single-window system can be made more
efficient. Streamlining processes, improving responsiveness and enhancing coordination across departments would further ease the approval experience for businesses
• State-level grievance redressal mechanisms
can be improved with additional reforms. More structured, timely and transparent mechanisms for addressing industry concerns would help create a smoother operational environment and strengthen investor confidence
136Investment Friendliness Index
Mizoram
Area: 21,081 sq km
GSDP per capita: Rs 202,980
Agriculture share of GVA (FY23): 5.1%
Industry share of GVA (FY23): 30.2%
Services share of GVA (FY23): 64.7%
FDI inflow (FY24): Not available*
Key industries: Food processing, textiles
Key enablers
• Favourable institutional environment
• Sound financial health
Data score (65) Survey score (35)
Areas needing improvement
• Government policy
• Business climate
Key performance indicators
• Low cyber crime rate
• Controlled fiscal deficit
Indicators for improvement
• Power cost
Overall
rank
Score
Category
rank29/36
39.9
N | 8/12
State category
L – Large state
C – City state
N – Northeastern/hilly state
20.6 19.3
* Not available” indicates nonavailability of published data
State profiles 137
State’s relative performance across pillars
Key factors driving the state’s score
• Mizoram’s score is driven by its performance
in the institutional environment and financial
health pillars. However, there are areas for
improvement in the infrastructure pillar
• The state’s sound financial health is on account
of interest payments of ~2.9% of GSDP in fiscal 2024, compared with the peer average of 3.7%, and a gross fiscal deficit of 5.6% of GSDP, compared with the peer average of 7.1% but still higher than the range laid out by the 15th Finance Commission
• High perception scores in land allotment and
use (10 points above the category average) and permissions/NOCs to start a business (three points higher than the category average), which drove the score for the regulatory ease pillar, are
supported by streamlined processes under the Mizoram Industrial Policy
• In institutional environment, Mizoram performed
well in perception around consistency of state policies, scoring nine points higher than the category average, with positive feedback on environmental clearances and utility connections via single-window systems
• In terms of policyholder satisfaction with state
policies, Mizoram scored six points below the category average, which led to a low score in the government policy pillar—this is an area for improvement
• In the business climate pillar, investment
promotion agencies emerged as an area for improvement as investors rated satisfaction with Mizoram’s IPA at ~40% below the category average
31%
17%
60%
68%
65%
69%
35%
28%
Mizoram has an overall score of 39.9, ranking eighth among northeastern and hilly states
and 29th overall. This score is driven by sound financial health and effective institutional
performance. However, there are areas for improvement in the government policy and business
climate pillars.
Best statePillar average
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
138Investment Friendliness Index
• Infrastructure could be improved. Mizoram
has a low rail density and lacks an airport with
international operations. The state’s railway
routes have measured only 1 to 2 km over the
past five years, and the current airport, Lengpui,
only offers domestic flights
State profiles 139
Nagaland
Area: 16,579 sq km
GSDP per capita: Rs 107,960
Agriculture share of GVA (FY23): 13.2%
Industry share of GVA (FY23): 12%
Services share of GVA (FY23): 74.8%
FDI inflow (FY24): Not available*
Key industries: Wood and products of wood and
cork, food products
Key enable rs
• High regulatory ease
• Favourable institutional environment
Data score (65) Survey score (35)
Areas needing improvement
• Resources
• Infrastructure
Key performance indicators
• Simplified business approval process
• Low crime rate
Indicators for improvement
• New technical workforce added
Overall
rank
Score
Category
rank27/36
41.2
N | 6/12
State category
L – Large state
C – City state
N – Northeastern/hilly state
19.8 21.4
* Not available” indicates nonavailability of published data
140Investment Friendliness Index
Key factors driving the state’s score
• Nagaland’s score is driven by its strong
performance in the government policy,
regulatory ease and institutional environment
pillars, reflecting consistent reform efforts and
stable governance
• For Nagaland, the five-year GSDP growth rate between fiscals 2019 and 2024 was 4.84%, surpassing the national average of 4.8%. The state achieved a high score in capital expenditure (capex) incentive disbursement relative to total industrial capex, with 18%, compared with the national average of 11% and category average of 17%. This, in conjunction with a high female workforce participation rate (59% in fiscal 2024 compared with the category average of 13% and the national average of 40%), highlight the inclusive growth momentum
• The regulatory ease pillar benefits from strong perception scores in land allotment and use (nine points above the category average), environmental clearance (eight points above the category average), and ease of exit—average time to close a business (10 points above the category average)
• Areas for improvement include increasing airport capacity at Dimapur Airport (currently accommodates 0.5 million passengers per annum), enhancing cargo-handling capabilities and addressing low rail density (lower than six states in the same category)
• With regard to digital infrastructure indicators, 5G/4G penetration (BTS per sq km area) is 26% lower than that of other states in the same category, and per capita digital payment transactions are 0.5x the category average.
• These present opportunities for further enhancements to support a more connected business ecosystem
State’s relative performance across pillars
24%
47%
68%
76%
49%
67%
32%
27%
Nagaland has an overall score of 41.2, ranking sixth among northeastern and hilly states and 27th
overall. This score is driven by significant regulatory ease and strong institutional environment.
However, there are notable areas for improvement in the resources and infrastructure pillars,
particularly in the human resources aspect.
Best statePillar average
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
State profiles 141
Voices from the ground
Areas of strength:
• Road construction quality is strong, with regular
maintenance supporting reliable connectivity.
The state maintains its road network well,
ensuring smooth travel and dependable
movement of goods. Periodic maintenance helps
preserve road quality and supports efficient
logistics operations. Industrial power supply is
stable, with no major outages or interruptions
• The Investment Promotion Agency functions effectively, providing meaningful support to investors. The agency plays an active role in facilitating investments, offering guidance and assistance that help businesses navigate processes more smoothly
• Law and order conditions are strong, with a low crime rate, contributing to a secure business environment. A stable security environment enhances investor confidence and supports an atmosphere conducive to long-term industrial growth
• The state’s industrial policy and broader economic framework are transparent and supportive. Clear and predictable policies enable businesses to plan with confidence and
understand the regulatory landscape without ambiguity
• Key regulatory processes such as land allotment and construction permits are highly transparent. These procedures follow well-defined steps, helping investors secure land and approvals more easily and reducing uncertainty during project setup
Areas of focus:
• Availability of skilled workers can be enhanced through targeted skilling initiatives. Introducing more industry-relevant training programmes would help address workforce gaps and support growing sectors more effectively
• The single-window system can be strengthened for greater efficiency. Although the system is in place, businesses often still need to visit multiple offices. Streamlining workflows and improving digital integration would help make the process more seamless
• Water connection processes offer room for improvement. While electricity connections are smooth, obtaining water connections can be time-consuming. Faster and more predictable procedures would support quicker project initiation
142Investment Friendliness Index
Odisha
Area: 155,707 sq km
GSDP per capita: Rs 125,282
Agriculture share of GVA (FY23): 8.6%
Industry share of GVA (FY23): 50.8%
Services share of GVA (FY23): 40.6%
FDI inflow (FY24): $8.79 million
Key industries: Basic metals, coke and refined
petroleum products
Key enablers
• Sound financial health
• Abundance of resources
Data score (65) Survey score (35)
Areas needing improvement
• Regulatory ease
Key performance indicators
• Interest payments as percentage
of GSDP
• Metallic minerals production
Indicators for improvement
• Contract enforcement and access
to commercial courts
Overall
rank
Score
Category
rank5/36
52.4
L | 4/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
32.0 20.4
State profiles 143
State’s relative performance across pillars
Key factors driving the state’s score
• The state shows strong performance in the
resources and financial health pillars. Areas for
improvement are institutional environment and
regulatory ease
• The high score in resources is attributable
to Odisha ranking first in metallic mineral production and coal production, at 50% and 23%, respectively, of India’s production as of fiscal 2024
• Total outstanding liabilities at 16% of GSDP
and its interest payments at 1.38% of the state GSDP as of fiscal 2024—both the lowest among states—helped it secure the third position in the financial health pillar
• In terms of infrastructure, Odisha’s performance
in container freight station (CFS) and inland container depot (ICD) capacity, as well as warehousing capacity, indicate areas for improvement. The state’s warehousing capacity is 98,000 MT, below the average of 4.7 lakh MT across states
• Foreign direct investment (FDI) equity inflows
have remained stagnant over the years, dropping to $9 million in 2024, ~81% lower than the state’s average FDI inflow over the previous three years. Investors expressed a need for improvement in the single-window policy, time taken for environmental clearances and ease of ceasing business operations
55%
46%
58%
61%
92%
78%
46%
36%
Odisha has an overall score of 52.4, ranking fourth in the large-state (L) category and fifth over-
all. This score is driven by the state’s strong performance in resources, government policy and
financial health pillars due to its leading performance in metallic mineral and coal production,
with institutional environment and regulatory ease being the areas for improvement.
Best statePillar average
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
144Investment Friendliness Index
• Investors outlined the scope for improvement in
the ease of contract enforcement and access to
dedicated commercial courts as Odisha scored
six points lower than the category average
Voices from the ground
Areas of strength:• The process for initiating a business in Odisha
is streamlined and adheres to the established timeframe, contributing positively to the investment climate. The registration process with the Registrar of Companies (ROC) has been notably efficient, with no significant obstacles faced, which fosters a supportive environment for entrepreneurs
• The law and order situation in Odisha is
comparatively more favourable than in other states, enhancing the overall business environment and providing a sense of security for investors and stakeholders
Areas of focus:
• There is an opportunity to enhance mobile
network coverage in Odisha’s suburban and rural regions, where Bharat Sanchar Nigam Ltd currently serves as the primary service provider. Improving connectivity in these areas could significantly benefit local businesses and residents
• The state’s industrial landscape could be
enriched by introducing a more diverse array of industrial parks and establishing competitive land pricing. This diversification would attract a broader range of industries and support economic growth
• The availability of industrial park facilities in
Bhubaneswar is limited and relatively costly, which may present challenges for startups. There is a strong opportunity for improved basic infrastructure and more affordable options to foster a supportive environment for emerging businesses
• North Odisha, particularly around Bhadrak,
faces several critical challenges that impact industrial and trade activities. One issue is the limited rail connectivity, with only one daily train service and certain areas lacking direct rail networks. Additionally, the road infrastructure is underdeveloped, which can create bottlenecks in the movement of goods
• The absence of a commercial airport in
Bhadrak complicates both passenger and cargo movement for industries across several districts, including those bordering West Bengal. Further, the Bhubaneswar airport is experiencing congestion, and its expansion into Khorda has not fully alleviated access issues from North Odisha due to traffic congestion in Cuttack. Developing an international airport in Bhadrak could serve the northern districts and help ease pressure on Bhubaneswar
• Port accessibility remains a concern, as Dhamra
Port is currently restricted from handling general commercial imports and exports, leading to operational challenges for businesses
• Customs and regulatory processes also
present challenges, as each port requires separate registration for trade, which can lead to duplicated efforts. Implementing a single- window system for air and sea cargo through ICEGATE could streamline processes and reduce paperwork
• The current single-window system could benefit
from enhancements, and there is a strong need for government support, including grants, SIDBI loans and IDCO land, to fulfil incoming orders. Timely clearance through the single-window process would greatly assist operations, as businesses currently approach each department individually. While SIDBI is willing to provide loans due to the potential impact of innovations, delays in acquiring IDCO land remain a hurdle
State profiles 145
Puducherry
Area: 490 sq km
GSDP per capita: Rs 219,259
Agriculture share of GVA (FY23): 1.0%
Industry share of GVA (FY23): 50.2%
Services share of GVA (FY23): 48.8%
FDI inflow (FY24): $4.76 million
Key industries: Electronics and chemicals
Key enable rs
• Sound financial health
• Abundance of resources
Data score (65) Survey score (35)
Areas needing improvement
• Infrastructure
Key performance indicators
• Controlled fiscal deficit
• Strong healthcare investments
Indicators for improvement
• Capacity of cold storage facilities
Overall
rank
Score
Category
rank21/36
44.9
C | 4/7
State category
L – Large state
C – City state
N – Northeastern/hilly state
28.9 16.0
146Investment Friendliness Index
Key factors driving the state’s score
• Puducherry performs well in the financial health
and resources pillar, but there are areas for im-
provement in the infrastructure pillar
• Puducherry’s score in the financial health pillar is driven by a low gross fiscal deficit as a per-
centage of GSDP, estimated at 2.88% for fiscal 2024, which is below the national average of 6.1% and the guideline laid out by the 15th Fi-
nance Commission of 3% over fiscals 2023-26
• In fiscal 2025, expenditure on medical and pub- lic health and family welfare in Puducherry ac-
counted for 9% of the aggregate expenditure, surpassing the national average of 6%
• Another indicator contributing to Puducherry’s overall score is its robust own tax revenue as a percentage of GSDP, which stood at 14.9%, com- pared with 5.1% for peer states
• Puducherry has lower cold-storage capacity by manufacturing GVA than four out of the six other states in the same category—this is an area for improvement
State’s relative performance across pillars
40%
48%
45%
53%
80%
69%
42%
30%
Puducherry achieves an overall score of 44.9, placing it fourth among City States/Union Territories
and 21st overall. This score is driven by sound financial health and performance in the resources
pillar. However, there are significant areas for improvement within the infrastructure pillar.
Best statePillar average
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
State profiles 147
Punjab
Area: 50,362 sq km
GSDP per capita: Rs 178,433
Agriculture share of GVA (FY23): 12.7%
Industry share of GVA (FY23): 27.2%
Services share of GVA (FY23): 60.1%
FDI inflow (FY24) : $180.08 million
Key industries: Food processing, basic metals,
coke and refined petroleum products
Key enable rs
• Good infrastructure
• Favourable institutional environment
Data score (65) Survey score (35)
Areas needing improvement
• Financial health
Key performance indicators
• High rail density
• Effective grievance redressal mechanism
Indicators for improvement
• Total outstanding liabilities
Overall
rank
Score
Category
rank22/36
44.7
L |14/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
21.4 23.3
148Investment Friendliness Index
Key factors driving the state’s score
• Punjab’s score can be attributed to its strong
performance in the regulatory ease and
institutional environment pillars, supported by
healthy performance in the infrastructure and
business climate pillars
• Resources and financial health have been identified as pillars for improvement for the state
• Punjab’s high score in institutional environment can be attributed to its low cybercrime rate of ~4%, which is lower than the category average, controlled economic crime rate at ~5%, again lower than its category average, and favourable perception scores in the grievance redressal mechanism (highest among large states)
• Punjab’s strong score in regulatory ease can be explained by investor satisfaction in the time
taken for availing construction permits (scoring seven points higher than the category average) as well as utility connections (four points higher than the category average)
• The state’s strong railway density, among the top five in Indian states, transmission and distribution losses (4%), which are lower than the category average, help it score well in the infrastructure pillar
• Punjab’s high proportion of patent applications as a percentage of number of registered enterprises, which is ~12% higher than the category average, drives its strong business climate scores
• Punjab’s consistently high share of outstanding liabilities, 46% of GSDP over the past five years and 16% higher than the category average in fiscal 2024, coupled with interest payments of 4-5% of GSDP (compared with the ~3.1% category
State’s relative performance across pillars
32%
20%
67%
72%
42%
69%
48%
36%
Punjab has attained an overall score of 44.7, ranking 14th among large states and 22nd overall.
Strengths include infrastructure, driven by its rail density, with opportunities for improvement
within the financial health pillar since the state has high total outstanding liabilities.
Best statePillar average
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
State profiles 149
average) highlight areas for improvement within
the financial health pillar and the need for
stronger financial controls
• Punjab could also focus on improving its allocation to education expenditure, currently 4% lower than the category average, which would help improve the technical workforce and STEM enrolment.
Voices from the ground
Areas of strength:
• The state benefits from a strong and accessible railway network that enhances overall industrial connectivity. The reliability and reach of the rail system provides an efficient option for freight movement, supporting multimodal logistics and helping businesses manage transportation costs and timelines more effectively
• The industrial policy framework, along with the rules and regulations in place, is transparent and flexible. This clarity in policy and regulatory processes enables smoother planning and execution for businesses. The flexibility offered allows companies to adapt quickly to market needs
• The single-window system is efficient, offering timely clearances and a smoother approval experience. The portal is streamlined and responsive, and the NOC process functions effectively. This reduces administrative delays and enhances ease of doing business for both new and expanding enterprises
• Regulatory processes such as environmental
clearances, construction permits and commercial contract approvals operate smoothly, supported by transparent labour laws. The predictability and clarity across these processes contribute to faster project implementation and create a more conducive operating environment for businesses
Areas of focus:
• There is scope to enhance road quality across certain regions to improve overall connectivity. Improving road conditions would support smoother movement of goods and people and strengthen last-mile logistics efficiency
• Power supply reliability can be further improved by reducing outages and interruptions. More consistent power availability through grid strengthening or better backup mechanisms would help industries operate without disruption, particularly those with continuous production requirements
• Land allotment processes offer room for additional transparency and procedural clarity. More streamlined and clearly communicated steps in land allocation would help businesses plan projects with greater predictability and reduce administrative uncertainty
• Disaster management systems can be strengthened by adopting more advanced technologies and quicker response mechanisms. Enhancing preparedness, real-time monitoring and response capabilities would boost overall resilience and create a more secure operating environment for industries
150Investment Friendliness Index
Rajasthan
Area: 342,239 sq km
GSDP per capita: Rs 122,629
Agriculture share of GVA (FY23): 12.7%
Industry share of GVA (FY23): 28.4%
Services share of GVA (FY23): 58.9%
FDI inflow (FY24) : $265.43 million
Key industries: Basic metals, food processing and
chemicals
Key enablers
• Abundance of resources
• High regulatory ease
Data score (65) Survey score (35)
Areas needing improvement
• Business climate
Key performance indicators
• High share in mineral production
• Ease of obtaining construction
permits
Indicators for improvement
• Credit to industries by banks
Overall
rank
Score
Category
rank10/36
48.1
L | 8/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
25.2 22.9
State profiles 151
State’s relative performance across pillars
Key factors driving the state’s score
• Rajasthan is among the top-performing states
in resources, regulatory ease and government
policy, with areas for improvement in the
business climate, institutional environment and
financial health pillars
• Rajasthan’s strong performance in resources
is driven by it accounting for 33% of the non- metallic mineral production of India, 14% of the metallic mineral production and a strong renewable resource potential ranking first, third and first, respectively, across the three indicators
• Rajasthan does consistently well across all
indicators in the regulatory ease pillar
• In perception scores for construction permits,
Rajasthan ranks among the top three states in the large state category, scoring six points above the category average
• In the infrastructure pillar, Rajasthan is a top
performer in warehousing capacity, ranking third
• Areas for improvement in business climate are
improving FDI inflows, currently 12% below category average, and focusing on improving MoU conversion of announced investments from the current ranking of 11th among large states
• The state can also improve its bank credit
to industry since it is 4% lower than the category average when measured against the manufacturing GSDP
51%
48%
67%
63%
52%
71%
43%
29%
Rajasthan has attained a score of 48.1, ranking eighth among large states and 10th overall.
Strengths include an abundance of natural resources driven by a high share in mineral produc-
tion with opportunities for improvement in the business climate pillar.
Best statePillar average
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
152Investment Friendliness Index
Voices from the ground
Areas of strength
• The state offers well-developed road networks
and smooth inter-state connectivity. This not
only facilitates seamless movement of goods
but also improves vehicle efficiency and
mileage, contributing to lower operating costs
for businesses. The railway network is similarly
reliable, providing an efficient alternative for
freight movement and enhancing multimodal
logistics capabilities
• Industrial parks across the state are equipped
with modern, well-maintained facilities. The availability of reliable utilities—power, water, and waste management—and strong connectivity within these zones help efficiency. Many parks also offer startup-friendly plug- and-play infrastructure, enabling faster setup times and reducing initial capital hurdles. Continuous upgrades in these parks indicate a proactive approach toward expanding industrial capabilities
• The state provides stable and high-speed
internet connectivity, which is increasingly essential for modern manufacturing and service operations. In addition, logistics and warehousing infrastructure is well-developed, enabling efficient storage, distribution and supply chain management. This strong digital and physical backbone significantly improves ease of doing business for companies operating in the region
Areas of focus:
• While major highways are strong, there is scope
to further enhance road conditions in interior regions. Targeted improvements in these areas would significantly boost last-mile connectivity and support smoother movement of goods and workforce
• Intermittent power cuts and seasonal
fluctuations can be improved. Addressing these through grid strengthening or alternative power backup solutions could create a more stable environment for industries with continuous production needs
• Greater communication and information
dissemination around available schemes such as the Investment Promotion Agency (IPA) would help more businesses benefit from them. Proactive outreach and simplified guidance could improve scheme utilisation
• Additional efforts in workforce skilling, job
creation, and entrepreneurship development, particularly targeted at startups and MSMEs, would further strengthen the state’s talent ecosystem and industrial competitiveness
• While the system is in place and helpful,
businesses indicated that additional streamlining could make approvals and clearances even more seamless. Continued digital integration and process optimisation would enhance ease of doing business
Hs Vsd oqn kdr 153
Sikkim
Area: 7,096 sq km
GSDP per capita: Rs 407,567
Agriculture share of GVA (FY23): 5.5%
Industry share of GVA (FY23): 63.8%
Services share of GVA (FY23): 30.7%
FDI inflow (FY24): Not available*
Key industries: Pharmaceuticals, medicinal
chemicals and botanical products
Key enable rs
• Supportive business climate
• Abundance of resources
Data score (65) Survey score (35)
Areas needing improvement
• Institutional environment
• Regulatory ease
Key performance indicators
• GSDP per capita
• High female workforce participation rate
Indicators for improvement
• Grievance redressal mechanism
Overall
rank
Score
Category
rank32/36
36.6
N |10/12
State category
L – Large state
C – City state
N – Northeastern/hilly state
24.3 12.3
* Not available” indicates nonavailability of published data
154Investment Friendliness Index
Key factors driving the state’s score
• Sikkim’s strong performance in the business cli-
mate pillar is driven by a high per capita GSDP
of approximately Rs 4.07 lakh for fiscal 2024, the
second-highest among states. Further, Sikkim’s
five-year GSDP growth rate (fiscals 2019-2024)
stood at ~5.9%, compared with India’s 4.8%. The
state also performs strongly in terms of number
of incubators per capita, nearly four times the
average for hilly and northeastern states
• Sikkim’s human resources indicators are favour-
able, with a high labour force participation rate of 57% (above the national average of 47%) and a healthy female workforce participation rate of 66% (highest nationally) in fiscal 2024
• The state faces challenges in infrastructure and regulatory aspects, with investor satisfaction regarding single-window permissions and NOCs for starting businesses being relatively low. This
has impacted performance in the regulatory challenge pillar, even with the integration into the National Single Window System
• Investor perception score of Sikkim’s grievance redressal mechanism is ~40% lower than the av-
erage perception score among northeastern and hilly states
• Investor perception of transport infrastructure is less favourable, particularly due to the Pakyong greenfield airport (Sikkim’s first greenfield air-
port), which becomes non-operational at times due to weather and technical issues. This situ-
ation has constrained air connectivity and ad-
versely affected the region’s economic potential
Voices from the ground
Areas of focus:
• Investors pointed out the need for an operational airport as that would significantly improve con- nectivity, ease of travel and accessibility for resi-
State’s relative performance across pillars
38%
19%
31%
47%
52%
63%
32%
39%
Sikkim has an overall score of 36.6, ranking 10th among northeastern and hilly states and 32nd
overall. This score is driven by its performance in the business climate and resources pillars. How-
ever, there are significant areas for improvement in the institutional environment, regulatory ease
and infrastructure pillars.
Best statePillar average
Infrastructure
Business climate
Resources
Government
policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
State profiles 155
dents and businesses. Improved air connectivity
would support economic activity, tourism, medi-
cal access, and overall mobility
• Road infrastructure can be strengthened to better withstand weather-related disruptions. During the monsoon, road stretches, including
the key highway link, often become non-opera- tional, causing challenges in transportation and essential services. Enhancing weatherproofing and resilience of these routes would help ensure uninterrupted movement and support economic, health, and education activities in the region
156Investment Friendliness Index
Tamil Nadu
Area: 130,060 sq km
GSDP per capita: Rs 217,801
Agriculture share of GVA (FY23): 4.6%
Industry share of GVA (FY23): 37.8%
Services share of GVA (FY23): 57.6%
FDI inflow (FY24): $2,436 million
Key industries: Automobile, machinery and
equipment, and electronics
Key enablers
• Good infrastructure
• Supportive business climate
Data score (65) Survey score (35)
Areas needing improvement
• Financial health
Key performance indicators
• Low turnaround time for ports
• Strong export performance
Indicators for improvement
• Interest payments as a percentage
of GSDP
Overall
rank
Score
Category
rank3/36
53.3
L | 3/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
29.7 23.6
State profiles 157
State’s relative performance across pillars
Key factors driving the state’s score
• Tamil Nadu is ranked third overall, with a good
score in the infrastructure and business climate
pillar
• Tamil Nadu’s 1st rank in the infrastructure
pillar among large states can be explained by its efficient port infrastructure, with the state ranking 3rd in turnaround time at ports weighed by capacity, low electricity downtime, 4% below the large-state average and contained T&D losses ~3% below the large-state average
• Tamil Nadu also excels in export performance,
with its 36% export-to-GSDP ratio being higher than the category average
• Tamil Nadu has room for improvement in
logistics infrastructure, with low CFS and ICD
capacity, 33% below the large-state average, relative to its manufacturing GVA
• The scores in the business climate pillar were
driven by the state having the second highest number of ATLs in India and a high MoU conversion rate. Investors commended the state on its consistency in policies
• In the government policy pillar, Tamil Nadu’s
stakeholder satisfaction score with state policies is good, reflecting positively on the state’s policy formulation and implementation processes
• Tamil Nadu also excels in the environment
resilience pillar, boasting 22% better-than- average air quality index (AQI) levels compared with its category average, as well as high perception scores regarding the state’s disaster preparedness
45%
30%
67%
70%
64%
80%
54%
46%
Tamil Nadu has an overall score of 53.3, ranking 3rd in both the overall and the large-state cat-
egory. Tamil Nadu’s score is driven by its strong performance in the infrastructure and business
climate pillars, with financial health being an area of improvement.
Best statePillar average
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
158Investment Friendliness Index
• Tamil Nadu’s financial health score is marginally
below average due to higher interest payments
(3.4% of GSDP) and high debt burden (total
outstanding liabilities at 31% of GSDP, close to
the pan-India average)
Voices from the ground
Areas of strength:
• Tamil Nadu’s road connectivity is exceptional,
with well-maintained roads connecting villages and cities, as well as high-quality state highways linking major industrial cities such as Chennai, Coimbatore, and Hosur
• The state has a dense rail network that connects
all major industrial cities and ports, including Chennai, Ennore, and Thoothukudi, facilitating efficient cargo movement for industries such as automobiles, cement, and textiles
• Tamil Nadu’s power grid is reliable, with a
renewable energy base, particularly wind and solar power, ensuring a consistent supply for industrial clusters such as Sriperumbudur, Hosur, and Coimbatore
• The state’s industrial parks, such as those
developed by SIDCO and SIPCOT, are well- planned, with amenities such as utilities, power, and road connectivity, making them attractive to global players in the auto and electronics sectors
• Tamil Nadu boasts one of India’s strongest
talent pools, with a large network of engineering
colleges, ITIs, and polytechnics, providing industries with access to disciplined, semi- skilled, and skilled workers at competitive costs
• The state has a well-structured investor
facilitation framework, including the Biz Buddy and Guidance Tamil Nadu Investor Facilitation Portal, which provides a fully digital, time- bound, and closely monitored grievance redressal system, with issues typically resolved within 30 days
Areas of focus:
• Chennai’s airport may benefit from expansion
to better serve the city’s growing population and business needs, particularly in terms of international connectivity, with currently limited direct flights to Europe despite the presence of many European MNCs
• Water availability is a challenge in certain areas
of Tamil Nadu, with difficulties in accessing water for industrial use, as well as limited availability of sewage water for treatment and reuse, particularly in land-locked areas and rain shadow zones
• The road infrastructure surrounding Chennai
Port could be improved, with current congestion and delays causing significant inefficiencies, including lengthy wait times of up to 36 hours for trucks to enter and exit the port, which can impact the viability of trucking operations
Hs Vsd oqn kdr 159
Telangana
Area: 112,077 sq km
GSDP per capita: Rs 217,801
Agriculture share of GVA (FY23): 8.2%
Industry share of GVA (FY23): 22.5%
Services share of GVA (FY23): 69.3%
FDI inflow (FY24): $3,029.07 million
Key industries: Pharmaceuticals, medicinal
chemicals and botanical products
Key enable rs
• Regulatory ease
• Supportive business climate
Data score (65) Survey score (35)
Areas needing improvement
• Institutional environment
Key performance indicators
• Strong STEM enrolment
• High tax revenue
Indicators for improvement
• Crime rate – economic and cyber
Overall
rank
Score
Category
rank13/36
47.3
L |10/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
25.3 22.0
160Investment Friendliness Index
Key factors driving the state’s score
• Telangana demonstrates strong performance in
the business climate and regulatory ease pillars.
A key driver of the high score in the regulatory
ease pillar is the Telangana State Industrial
Project Approval and Self-Certification System
(TS-iPASS), which has digitised and streamlined
construction permits
• The business climate pillar is influenced by various indicators, including land availability. Telangana has one of the largest land areas available for allotment among states, with its available land as a percentage of state area being three times that of the category average
• Further, the state’s high own-tax revenue as a percentage of GSDP, standing at 17% in fiscal 2024, surpassing the pan-India average of 9.8%, indicates robust state tax collection, allowing flexibility in spends
• In Telangana, the percentage of students enrolled in STEM against the total enrolment in higher education was twice the national average in fiscal 2022
• The state hosts well-functioning commercial courts equipped with modern e-filing systems, enhancing judicial efficiency for business disputes
• The state scores low on the institutional environment pillar, primarily due to elevated crime rates, particularly in economic offences and cybercrimes
• Telangana has one of the highest crime rates in India, particularly in economic offences, which reached 75 per lakh population in 2022, compared with an average of 16 per lakh population across the states. Additionally, cybercrimes were recorded at 43 per lakh population in 2022, significantly exceeding the pan-India average of 5 per lakh population
State’s relative performance across pillars
44%
36%
63%
48%
67%
76%
42%
39%
Telangana has an overall score of 47.3, ranking 10th in the large state category and 13th overall.
The state’s score is driven by its performance in the business climate and regulatory ease pillars.
However, there are areas for improvement in the institutional environment pillar.
Best statePillar average
Infrastructure
Business climate
Resources
Government
policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
State profiles 161
Voices from the ground
Areas of strength:
• Hyderabad’s strategic location at the centre
of the South-Central Railway zone provides
excellent passenger connectivity, while the
expansion of freight capacity through new
industrial sidings and cargo terminals at Kazipet
and Sanathnagar enhancing the state’s logistics
infrastructure
• The TS-iPASS is widely regarded as one of India’s most efficient single-window mechanisms, offering fully online, time-bound approvals with automatic clearances, making it exceptionally easy for investors and industries to operate in the state
• The state benefits from a clear policy framework for industries to exit smoothly, ensuring that the interests of investors, employees, and financial institutions are protected, and providing a stable and predictable environment for businesses
• Hyderabad is consistently ranked as one of the best cities to live in India, offering a high quality of life, affordability, excellent education, and healthcare facilities, as well as a low crime rate and minimal destruction factors, making it an attractive destination for talent and businesses
• Telangana’s power supply is highly reliable, with high utilisation and minimal power outages, which are typically short in duration, and minimal load-shedding for industrial feeders, ensuring a stable and uninterrupted supply of power to industries and businesses
Areas of focus:
• While Telangana has made progress in ease of doing business, there is still room for improvement in terms of reducing costs and timelines for setting up and operating a business, particularly when compared with other business-friendly states
• While the TS-bPASS system has streamlined the process for obtaining construction permits for residential and small commercial projects, there is still scope for improvement in terms of timelines and inter-departmental coordination for larger industrial or commercial projects
• The automobile industry faces challenges in Telangana due to high taxes and a complex RTO system, which can make it difficult to operate a viable business in the state
• There may be opportunities for improvement in terms of accountability and efficiency in the issuance of NOCs and power supply, as well as in the coordination between agencies, to ensure a smoother experience for businesses
• First-time entrepreneurs and MSMEs require additional support and guidance to navigate the documentation requirements, which can be complex and time-consuming, and may benefit from more streamlined and accessible processes
162Investment Friendliness Index
Tripura
Area: 10,486 sq km
GSDP per capita: Rs 125,352
Agriculture share of GVA (FY23): 13.6%
Industry share of GVA (FY23): 27.3%
Services share of GVA (FY23): 59.1%
FDI inflow (FY24): $0.19 million
Key industries: Rubber and plastics, and food
processing
Key enablers
• High regulatory ease
• Favourable institutional environment
Data score (65) Survey score (35)
Areas needing improvement
• Business climate
Key performance indicators
• Ease of business closure
• Effective grievance redressal
mechanism
Indicators for improvement
• Industrial area available for
allotment
Overall
rank
Score
Category
rank20/36
45.0
N | 4/12
State category
L – Large state
C – City state
N – Northeastern/hilly state
22.4 22.6
State profiles 163
State’s relative performance across pillars
Key factors driving the state’s score
• Tripura excels in the regulatory challenge and
institutional environment pillars. However, there
are areas for improvement in the infrastructure
pillar
• Tripura performs well in agri-logistics
infrastructure, boasting a cold-storage capacity of ~51,140 MT. This translates to a cold-storage capacity as a proportion of manufacturing GVA that is 2.3 times the peer average. Additionally, the cold-storage capacity as a percentage of manufacturing GVA at about 39% is the highest among northeastern states and 23% above the pan-India average
• Tripura also performs strongly on regulatory
perception indicators, particularly speed of land
allotment, construction permits, and grievance redressal mechanisms (where it scored highest in its category). This places it among the better- performing northeastern states in institutional transparency
• In the ease of exit indicator, Tripura scores
10 points more than the category average. Meanwhile, in terms of perception of the grievance redressal mechanism, the state has achieved the highest score among northeastern and hilly states
• The business climate pillar has areas for
improvement, as the number of ATLs per capita stands at 5.4%, compared with the category average of ~15%
34%
46%
68%
74%
55%
71%
40%
26%
Tripura has a score of 45.0, ranking 4th among northeastern and hilly states and 20th overall.
This score is primarily driven by significant regulatory ease and strong institutional environment.
However, there are notable areas for improvement within the business climate pillar.
Best statePillar average
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
164Investment Friendliness Index
• Tripura’s strategic location on the eastern
border provides access to Bangladesh and
Bay of Bengal ports. Yet, its export share
remains negligible (<0.01% of India’s total; ~$15
million in fiscal 2023) due to limited product
diversification and trade facilitation gaps
• Key challenges in starting a business in the
state include poor last-mile connectivity and lack of internet access in rural areas, slow documentation and approval processes, and relatively high compliance costs
• Tripura’s availability of industrial land for
allotment as a percentage of the total state area stands at ~2.6%, compared with the category average of about 21%
Voices from the ground
Areas of strength:
• The state offers strong transportation
connectivity through roads. Road connectivity is good, and the railway network functions effectively, supporting reliable movement of goods
• Power supply is stable with no major outages,
and the state’s digital infrastructure is robust, offering high-speed connectivity and wide network coverage
• Land approval processes are efficient,
and construction permit procedures are transparent. The state offers a smooth and predictable experience for land allocation, and the construction permit process follows clear and transparent guidelines, improving ease of doing business for new and expanding industries
Areas of focus:
• The state has significant potential to serve
international markets on the eastern side, but growth has been slower than its strategic location suggests. Leveraging its position more
effectively through infrastructure expansion and stronger trade linkages would help unlock broader economic opportunities
• Road conditions in several areas can be improved
to enhance internal connectivity. Strengthening road quality would support smoother logistics movement and improve access across the state
• Air connectivity can be expanded beyond the
current single airline operating in the state. Stronger regional air links connecting Tripura with Assam, Meghalaya, Mizoram, Nagaland, and Arunachal Pradesh would position the state more effectively as a gateway to the Northeast and support both business and tourism
• Greater clarity and accuracy in the functioning
of the Investment Promotion Agency would be beneficial. More consistent communication, streamlined information, and better guidance on schemes and incentives would help investors engage with the agency more effectively
• Availability of skilled workforce can be improved
through targeted training initiatives. Focused skilling programmes aligned with industry needs would help address talent gaps and support sectors with growing manpower requirements
• Quality of life indicators can be improved to
attract and retain talent. Enhancements in urban amenities, social infrastructure, and public services would help create a more attractive living environment for the workforce
• The single-window system offers scope for
greater efficiency. Strengthening digital integration and reducing procedural steps would help streamline approvals and improve ease of doing business
• Disaster management systems can be
strengthened with the use of advanced technologies. Adopting real-time monitoring, predictive tools, and faster response frameworks would enhance resilience and improve preparedness during natural events
Hs Vsd oqn kdr 165
Uttar Pradesh
Area: 240,928 sq km
GSDP per capita: Rs 70,661
Agriculture share of GVA (FY23): 14.7%
Industry share of GVA (FY23): 28.8%
Services share of GVA (FY23): 56.5%
FDI inflow (FY24) : $333.61 million
Key industries: Food processing and electronics
Key enable rs
• Supportive business climate
• Favourable institutional environment
Data score (65) Survey score (35)
Areas needing improvement
• Environment resilience
• Financial health
Key performance indicators
• Extensive ATL presence
• Consistency in state policies
Indicators for improvement
• Air quality index
Overall
rank
Score
Category
rank19/36
45.0
L |13/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
23.4 21.6
166Investment Friendliness Index
Key factors driving the state’s score
• Uttar Pradesh has performed well in the business
climate and institutional environment pillars;
however, environment resilience and financial
health remain areas for improvement
• The state has demonstrated progress in fostering
a supportive business environment through improvements in economic performance, innovation and business facilitation. Its capital expenditure outlay as a percentage of GSDP increased to 13% in fiscal 2024 from 8% in fiscal 2019, reflecting a CAGR of ~10%. Capex as a percentage of GSDP in fiscal 2024 was ~40% higher than the average for large states
• The state’s improving startup ecosystem highlights its maturing business landscape, with the number of startups registered increasing to 3,426 in fiscal 2024 from 807 in fiscal 2019. In
fiscal 2023, the percentage of startups registered
compared with the total number of companies was 13% higher than the average for large states
• Uttar Pradesh has rapidly become a national leader in transport infrastructure, accounting for the largest share of India’s access-controlled expressway network
• The state has made significant strides in promoting innovation and creativity among
students through a wide network of ATLs, ranking
third-highest among states with a total of 955 ATLs in 2023. These labs, established under the Atal Innovation Mission, have played a key role in fostering a culture of experimentation and
problem-solving at the school level. The extensive
coverage of ATLs across districts reflects the
state’s emphasis on strengthening the innovation
pipeline and nurturing future talent
• Policy stability and predictability have emerged as strong enablers of investor confidence in the
state. It is reflected in the industrial, logistics and
startup policies, ensuring reforms are followed through and objectives are sustained across political cycles
• However, the state faces considerable exposure
State’s relative performance across pillars
38%
28%
60%
66%
64%
62%
45%
33%
Uttar Pradesh has an overall score of 45.0, thereby ranking 13th in the Large state category and
19th overall. As India’s most populous state, Uttar Pradesh has a significant strategic and economic
position owing to its large domestic market, improving infrastructure base and growing industrial
ecosystem. The state has leveraged its demographic advantage and proactive governance reforms to
strengthen its position as a prominent investment destination in northern India.
Best statePillar average
Infrastructure
Business climate
Resources
Government
policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
State profiles 167
to natural and environmental risks that can
impact both human well-being and long-term
investment sustainability. A major challenge
is from persistently poor air quality across
several industrial and urban regions, reflecting
the combined effects of vehicular emission,
construction activity and seasonal agricultural
practices. For majority of the year, cities such as
Noida, Greater Noida, Ghaziabad, Bulandshahr,
and Muzaffarnagar experience AQI levels ranging
between 200 and 300. Further, the majority of
the remaining cities typically record AQI levels
between 100 and 200 for the greater part of the
year
• Also, there is scope for improvement in the financial health pillar. The state’s interest payments as a percentage of its GSDP are 13% higher than the average for large states. Further, the gross fiscal deficit of UP as a percentage of GSDP is ~4% higher than its category average
• Addressing these challenges through stricter
enforcement of environmental norms, investment
in clean technologies and coordinated regional efforts will be essential for the state to sustain its growth momentum, while ensuring a more sustainable development trajectory
Voices from the ground
Areas of strength
• The state boasts excellent railway and airport facilities, which are comparable to or better than those in other states
• The state government has also introduced subsidies to promote industrial growth, and, overall, the experience of doing business in Uttar Pradesh has improved slightly. While there is still room for more flexibility and transparency, the state fares marginally better than its neighbours
• Uttar Pradesh has made significant strides in
streamlining the process of obtaining warehouse
construction permits, particularly in Greater Noida, where approvals can be obtained in as
little as 15-20 days. This is a marked improvement
over regions such as Faridabad and Manesar, where the process can take up to a month. The state’s efforts to invest in this area have yielded encouraging results, making it an attractive destination for businesses
• Uttar Pradesh offers a readily available and
diverse workforce, ensuring no productivity issues
for the manufacturing sector. However, the state faces a challenge in retaining talent, particularly in the Kanpur area, as many professionals prefer to relocate to the NCR due to inadequate infrastructure and lower salaries
Areas of focus
• While the state’s highways are well-maintained, the roads within cities, particularly in Kanpur, could benefit from improvement to reduce
congestion and enhance overall connectivity. The
industrial road infrastructure requires upgrading
as well to support the growth of industries in the state
• There is a need to diversify the location of industrial parks beyond Noida, with cities such as Kanpur, which has a strong industrial base, deserving of similar investments
• The ICDs in UP face challenges such as:
- Congestion
- Variable customs clearance times
- Limited digitalisation
• Adopting best practices from other states, such as
implementing RFID gate systems, 24/7 customs
support and transparent tariff dashboards, could
improve efficiency and reliability.
• The state’s power supply infrastructure requires attention, with issues such as:
- Unreliable industrial-grade supply
- Frequent outages
- High transmission losses
• Implementing feeder segregation for industry, rapidly upgrading substations, rolling out smart meters, and instituting clear service level agreements for distribution companies could help mitigate these issues.
• Exploring options to improve the efficiency and responsiveness of the power sector, such as privatisation, could help address the frequent power faults and difficulties in resolving issues with the current system
• Simplifying the process of obtaining NOCs by reducing paperwork and introducing digital solutions could help streamline business operations
168Investment Friendliness Index
Uttarakhand
Area: 53,483 sq km
GSDP per capita: Rs 202,573
Agriculture share of GVA (FY23): 3.7%
Industry share of GVA (FY23): 50.4%
Services share of GVA (FY23): 45.9%
FDI inflow (FY24): $60.13 million
Key industries: Automobile and chemicals
Key enablers
• Abundance of resources
• Sound financial health
Data score (65) Survey score (35)
Areas needing improvement
• Infrastructure
• Government policy
Key performance indicators
• Strong inflow of graduates to the
workflow
• Controlled fiscal deficit
Indicators for improvement
• Airport capacity per capita
Overall
rank
Score
Category
rank11/36
47.5
N | 1/12
State category
L – Large state
C – City state
N – Northeastern/hilly state
25.3 22.2
State profiles 169
State’s relative performance across pillars
Key factors driving the state’s score
• Uttarakhand offers excellent banking facilities
and financial availability, complemented by a
favourable industrial environment
• The state provides a seamless and efficient
experience for businesses, with all government- related paperwork processed through a single- window online platform in a short timeframe. Also, in 2024, the number of patents filed was 1,637, which was 28% higher vs the pan-India average. This indicates a robust environment for innovation and a commitment towards fostering intellectual property development
• The state has also excelled in the number
of individuals entering the workforce as a percentage of the population, at 1.32%, the
highest among northeastern and hilly states
• Uttarakhand had a fiscal deficit of 4.4% in fiscal
2024, which was ~3% lower than the category average, albeit still higher than the limit set out by the 15th Finance Commission
• Utility connections are readily accessible in the
industrial areas of Uttarakhand, scoring four points above the category average. The state also boasts a robust disaster management system, scoring three points higher than the category average. This well-equipped framework provides an added layer of security and resilience for businesses operating in the region
• With 16.7 million passengers per annum in 2023,
the airport passenger handling capacity in Uttarakhand is lower than that of six states in
47%
21%
64%
69%
77%
78%
41%
35%
Uttarakhand has attained an overall score of 47.5, ranking first among northeastern and hilly
states and 11th overall. Strengths include human resources, characterised by a strong inflow
of graduates into the workforce. However, there are opportunities for improvement in the
government policy and infrastructure pillars.
Best statePillar average
Infrastructure
Business climate
Resources
Government policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
170Investment Friendliness Index
its peer category on a per capita basis; hence,
expansion could be explored
• The state can improve in the government policy
area as well with its performance in indicators such as capex incentive disbursed as a percentage of total industrial capex and R&D incentive disbursed as a percentage of state GVA being below the category average
Voices from the ground
Areas of strength
• The condition of highways and ICDs are
satisfactory, providing a robust transportation infrastructure for the movement of goods and people
• There is considerable availability of technically
skilled and readily available workforce, providing a significant advantage for industries
• The state’s policy framework is conducive
to business growth, with regulations and incentives supportive of entrepreneurship and investment
Areas of focus
• Power supply is stable, with no long-duration
outages; however, it has been reported that there are some unscheduled power outages and also that there is a lack of adequate dispute redressal by Uttarakhand Power Corporation Ltd
State profiles 171
West Bengal
Area: 88,752 sq km
GSDP per capita: Rs 96,618
Agriculture share of GVA (FY23): 10.5%
Industry share of GVA (FY23): 30.4%
Services share of GVA (FY23): 59.1%
FDI inflow (FY24): $181.49 million
Key industries: Basic metals, coke and refined-
petroleum products
Key enable rs
• Good infrastructure
• Favourable institutional environment
Data score (65) Survey score (35)
Areas needing improvement
• Business climate
• Government policy
Key performance indicators
• Adequate cold storage capacity
• Minimal impact of labour disruptions
Indicators for improvement
• Number of startups registered
Overall
rank
Score
Category
rank24/36
41.3
L |15/17
State category
L – Large state
C – City state
N – Northeastern/hilly state
20 .1 21.2
172Investment Friendliness Index
Key factors driving the state’s score
• West Bengal demonstrates strong performance
in the infrastructure and institutional
environment pillars, with areas for improvement
in the government policy and business climate
pillars
• The state boasts one of the highest rail densities in the country, with railway routes per sq km of the state area twice the national average in fiscal 2023
• West Bengal has the second-largest cold storage capacity in India at ~59 lakh metric tonne (fiscal 2022), with facilities strategically located in all district headquarters and major industrial estates
• The state also benefits from a highly reliable power supply, with electricity transmission and distribution losses at ~10% below the national average in fiscal 2023
• From an institutional environment perspective, West Bengal maintains one of the lowest crime rates among major Indian states. As per the National Crime Records Bureau’s Crime in India 2022 report, cognisable crime rate in the state was only 12 incidents per lakh population against the national average of 17 per lakh population
• However, government policy emerges as an area within which improvement can be made. With respect to incentive allocation as a percentage of state budget and capex incentive disbursed as a percentage of total industrial capex, the state has performed below average for the Large state category.
State’s relative performance across pillars
35%
17%
59%
65%
45%
69%
49%
23%
West Bengal has an overall score of 41.3, ranking 15th among Large states and 24th over-
all. This score is primarily influenced by its performance in the infrastructure and institutional
environment pillars. However, there are notable areas for improvement in the government policy
and business climate pillars.
Best statePillar average
Infrastructure
Business climate
Resources
Government
policy
Regulatory ease
Institutional environment
Financial health
Environment resilience
State profiles 173
• West Bengal, though, attracts a disproportionately
low share of FDI. Inflows totalled $428 million in
2022, decreasing to $394 million in 2023, and
falling further to $181 million in 2024. Over the
three years, this totalled only 0.67% of India’s
overall FDI share. Additionally, PE and VC activity
in the state/GSDP is subdued at 0.45% of inflows
vs the large peer state average of 2.56%
• State-wise interest payments-to-GSDP ratio of 4.85% was higher than the national average of 3.3% in 2024, impacting its financial health pillar score
• Although the situation has improved over the past three years, with a rising number of startups, the ratio of startups-to-total companies is still 2% below the category average
Voices from the ground
Areas of strength
• Power outages are rare for domestic as well as industrial consumers, and electricity charges are comparatively lower than in many other states
• There are several logistic hubs and cold storage facilities in every district headquarters as well as in each industrial estate, enhancing the state’s supply chain efficiency
• Most cities, towns and district headquarters in the state are well connected to other parts of the country through an extensive railway network that supports both passenger and goods services
• So far, there have been no issues related to a lack of skilled workforce. West Bengal has been a significant contributor to the skilled labour supply across the country for decades
• Additionally, the state government has initiated several projects aimed at creating more job
opportunities through the expansion of the MSME sector
• Kolkata is recognised as the cultural capital of India. The people of West Bengal are known for their rich cultural heritage, productivity, peace-loving nature, political engagement and readiness to protest for their rights. The crime rate in the state is low
Areas of focus
• Considerable investments are being made in Assam and other northeastern states, therefore requiring an improvement in road/rail infrastructure and connectivity. Road conditions and maintenance across the state need improvement
- Obtaining NOCs and permissions to start a
business in West Bengal requires multiple approvals, depending on the sector – comprises factory licence, trade licence, building permit, fire safety, electricity, pollution control, labour registrations, etc
- The state’s SilpaSathi single-window system
has brought some order to the process, but the number of approvals remains high, especially for manufacturing and infrastructure-heavy businesses
• Allotment of land/securing land in West Bengal has historically been one of the more complex aspects of doing business in the state, given political sensitivities around land acquisition. While there have been reforms, the experience remains mixed
174Investment Friendliness Index
Annexures
Annexure 1: List of indicators
Table 3: List of indicators—Infrastructure
Parameter Indicator Source
Logistics
Capacity of airport per capita population Lok Sabha questions
Cargo capacity of airport/manufacturing GVA Rajya Sabha question
Number of airports with international operations for
three years/area of state (sq km)
Airports Authority of India
Road density [national highway (40%) + state highway
(40%) + rural roads (20%)]/area of state (sq km)
RBI Statistical Handbook
Investment in roads/total state expenditure RBI State Finances report
Quality of roads (condition of roads and connectivity
to industrial hubs)
Perception survey
Rail density: Total length of railway tracks (km)/area of
state (sq km)
RBI Statistical
Handbook–Railways
Turnaround time weighted by capacity for major and
non-major ports
Ministry of Ports, Shipping and
Waterways, 2023 update
Capacity of ports/manufacturing GVA (container, dry
bulk, POL)
Ministry of Ports, Shipping and
Waterways, March 2024 update
Investor perception of transportation infrastructure in
the state
Perception survey
Warehousing
CFS and ICD capacity/manufacturing GVA
Press Information Bureau
(PIB)/Ministry of Finance
Total capacity of cold storage facilities (tonnage)/
manufacturing GVA
RBI Statistical Handbook
Capacity of warehousing/manufacturing GVA Gati Shakti portal
Energy
Power cost: Industrial NITI Aayog State Report
Power cost: Commercial NITI Aayog State Report
T&D loss
RBI Statistical Handbook–T&D
loss
Share of renewables in power generation capacity
NITI Aayog India Climate and
Energy Dashboard
Average electricity downtime: commercial RBI Statistical Handbook
Investor perception of the power infrastructure in the
state
Perception survey
Digital
infrastructure
5G and 4G penetration (BTS/sq km)
Department of
Telecommunications
Digital payment transactions (per capita)
Ministry of Electronics and
Information Technology
Annexures 175
Table 4: List of indicators—Business climate
Parameter Indicator Source
Industrial
parks
State-wise industrial area available for allotment/to-
tal land state area
IILB database
Perception of plug-and-play infrastructure parksPerception survey
Investor perception of other infrastructure in the
state—storage and digital
Perception survey
Parameter Indicator Source
Economic performance
GSDP per capita MoSPI
GSDP growth rate MoSPI
Capital expenditure/GSDP RBI Statistical Handbook
Exports/GSDP RBI Statistical Handbook
Innovation
Expenditure on R&D as a percentage of GSDP Self-reported by States
Incubators per lakh population
Department for Promotion of Industry and Internal Trade (DPIIT)
ATLs in the state per capita Atal Innovation Mission
Number of patent applications filed/number of enterprises
IP India annual report
Business facilitation
State tax revenue/GSDP RBI Statistical Handbook
FDI inflows as a percentage of GSDP
PIB (Reply given in Lok Sabha by the Minister of Commerce and Industry)
State-wise credit to industry by banks/manufacturing GSDP
RBI Handbook of Statistics on Indian States
Number of functioning branches of commercial banks per lakh population
RBI Handbook of Statistics on Indian States
Total value of PE and VC investments in the state/GSDP
Indian Venture and Alternate Capital Association
Investor satisfaction with investor facilitation centres, based on information availability, handholding of investors and other support provided
Perception survey
MoU conversion rate: MoUs converted/investments announced during each financial year
Self-reported by states
Number of startups as a share of the number of companies registered in that year
PIB/DPIIT
New businesses registered in the state as a share of the number of businesses registered in India
Ministry of Corporate Affairs
Medium and small enterprises as a proportion of total MSMEs in the state
Udyam dashboard
176Investment Friendliness Index
Parameter Indicator Source
Natural
resources
Annual extractable ground water resource
(bcm)/area of the state
Central Ground Water Board
Share of state in national metallic minerals
production (in value)
Ministry of Mines
Share of state in national non-metallic minerals
production (in value)
Ministry of Mines
Share of state in national coal and lignite productionCoal Controller Organisation
Renewable resource potential
(solar + wind + hydro + bioenergy)
Ministry of New and Renewable
Energy
Human
resources
Percentage of students enrolled in STEM courses
against the total enrolment in higher education
in the state
Directorate of Higher Education
(DHE)
New technical workforce added each year as a
percentage of population (i.e., industrial training
institutes, engineering)
DHE
Number of people entering the workforce as a
percentage of population (graduates and
post-graduates)
DHE
Women workforce participation rate
Periodic Labour Force Survey
(PLFS)
Working age population/total population PLFS
State government budget on skilling/total budgetSelf-reported by states
Vocational training capacity as a percentage of the
population
Ministry of Skill Development and
Entrepreneurship
Percentage of colleges in the state in the top 100
National Institutional Ranking Framework (NIRF)
list/ number of colleges in the state
NIRF
Workforce quality Perception survey
State expenditure on education as a percentage of
GDP
RBI State Finances report
Quality of life – availability of schools, hospitals,
social infra, job opportunities for family
Perception survey
Healthcare investments in the state/state’s capital
expenditure
RBI State Finances report
Table 5: List of indicators—Resources
Annexures 177
Parameter Indicator Source
Compliance
requirements
No-objection certificates/permissions to start a
business
Perception survey
Land allotment and use Perception survey
Environmental clearance Perception survey
Ease of exit (average time to close) Perception survey
Construction permits Perception survey
Utility connections: electricity and water Perception survey
Enforcement
quality
Investor satisfaction with the single-window policyPerception survey
Ease of contract enforcement and access to dedicated
commercial courts
Perception survey
Table 7: List of indicators—Regulatory ease
Table 8: List of indicators—Financial health
Parameter Indicator Source
Debt profile
Total outstanding liabilities as a percentage of GSDP
RBI Handbook of Statistics on Indian States
State’s interest payments as a percentage of GSDP
RBI Handbook of Statistics on Indian States
Fiscal balance
State’s gross fiscal deficit as a percentage of GSDP
RBI Handbook of Statistics on Indian States
Parameter Indicator Source
Incentive support
Capex incentive disbursed in a year/total Industrial capex
Self-reported by states
Incentive allocation/state budget Self-reported by states
R&D incentive disbursed/state GVA Self-reported by state
Policy effectiveness
Stakeholder satisfaction score with state policies: design, time taken for approvals and time for disbursement
Perception survey
Table 6: List of indicators—Government policy
178Investment Friendliness Index
Table 10: List of indicators—Environment resilience
Parameter Indicator Source
Risk
exposure
Percentage of the state’s area in earthquake zone VMinistry of Earth Sciences
State-wise AQI
Ministry of Environment, Forest
and climate Change
Weighted parameter for number of cyclones, days
of flooding and number of landslide events (equal
weightage)
National Disaster Management
Authority
Disaster-
readiness
Disaster preparedness of the state Perception survey
Table 9: List of indicators—Institutional environment
Parameter Indicator Source
Security and stability
Crime rate in the state: economic offences
National Crime Records Bureau (NCRB)
Number of cybercrimes in the state NCRB
Severity of labour disruptions Perception survey
Policy consistency and governance
Regulatory environment Perception survey
Grievance redressal mechanism Perception survey
Consistency in state policies Perception survey
Annexures 179
Figure 19: Scoring methodology for secondary indicators
Annexure 2: Detailed scoring methodology for secondary indicators
For secondary indicators, minimum-maximum normalisation was adopted for scoring (see Figure 19).
Check if there are extreme
outliers in the range
Min-max normalisation
Trimmed Min-max normalisation
Min-max normalisation is the default
standardisation method and will be
used for most secondary indicators
• Use when: 1 outlier
• Condition: If the highest value exceeds the second-highest by >40 points
• Steps:
- Highest value 100
- Second-highest value 90
- Others scaled between 0–90 using Min-max
Use when: More than 1 outlier Condition: Gap between lowest extreme outlier is separat- ed from the rest by >40 point gap Steps involved when there are two outliers: Highest value 100 Second-highest value 95 Third highest value 90 Others scaled between 0–90 using Min-max
1. For most secondary indicators, min-max nor-
malisation was the preferred approach. In
this method, the raw data for each indicator is
converted into a standardised score between
0 and 100. This is done by first identifying the
minimum and maximum values of the indicator
across all 36 states and Union Territories. For
each state, the minimum value is subtracted
from its raw score, and the result is then divided
by the range of the data, i.e. the difference be-
tween the maximum and minimum values. This
process ensures that the state with the lowest
value gets a score of 0, the one with the highest
value gets a score of 100, and all others fall pro-
portionally in between. For indicators where a
lower value represents better performance, the
formula is reversed so that higher scores always
reflect better outcomes.
2. To ensure fair and representative scoring across
data points, a trimmed min–max normalisa-
tion technique was employed in cases where outliers were present. This approach modifies
the standard min-max normalisation method by addressing the disproportionate influence of extreme values on the overall score distri-
bution. In instances where a single outlier was identified, that data point was clipped from the normalisation range and assigned a score of 100, while the remaining data points were nor-
malised using the min-max formula within the adjusted range and normalised out of 90. In cas-
es where multiple outliers were detected, the highest outlier received a score of 100, the sec-
ond-highest outlier was assigned 95, and the remaining data points were again normalised out of 90. This trimmed normalisation ensures that the outliers are appropriately recognised for their exceptional values without dispropor-
tionately compressing the score range of the rest of the dataset, thereby maintaining both comparability and interpretive balance across variables.
180Investment Friendliness Index
Figure 20: Trimmed min-max technique for number of international airports/area of state
Application of trimmed min-max normalisation
Min-max normalisation Trimmed min-max normalisation
0.0
20.0
40.0
60.0
80.0
100.0
0.0
20.0
40.0
60.0
80.0
100.0
Annexures 181
Annexure 3: Perception questions to
assess investment friendliness of
states
Note: Responses rated on a scale of 1-10
• An optional feedback box was provided at the
end of each section, where the respondent
provided reasoning/feedback for his/her
score/s.
• If a question was not relevant to respondent’s experience, they had the choice to select ‘Not Applicable’
• Each respondent had the choice to rate upto
5 states
Quality of roads
1. How would you rate the quality of roads in the
state?
You may consider factors such as construction
quality and maintenance of the road to provide
your response
2. How is the road connectivity in the state?
You may consider the connectivity between
industrial hubs/office locations and ports/ highways/airports/ICDs and provide your response basis the time taken for goods
transfer/commute
Transportation infrastructure
• Which type of transportation infrastructure would you like to provide feedback on?
Sub-questions to be asked basis the option
chosen
3. How would you rate the performance of
the railway network in meeting business transportation requirements?
You may consider factors such as rail schedules,
cargo capacity, availability of rail sidings,
locomotives, wagons, rail infrastructure,
passenger commute options and transfer
facilities to provide your response
4. How would you rate the performance of
airports in meeting business transportation
requirements?
You may consider factors such as flight
schedules, proximity to your facilities, transit
times and airport infrastructure to provide
your response, assessing the overall efficiency
and cost-effectiveness of airport services
5. How would you rate the performance of
seaports in meeting business transportation
requirements?
You may consider factors such as berth
availability, cargo handling, turnaround time,
demurrage charges and port infrastructure to
provide your response
6. How would you rate the overall performance of
ICDs in meeting your business requirements?
You may consider factors such as container
handling efficiency, customs clearance
procedures, storage, demurrage charges and
warehousing facilities to provide your response
Power infrastructure
7. How reliable is the state’s industrial power
supply?
You may consider factors such as frequency
and duration of power outages and voltage
fluctuations to provide your response,
assessing the reliability of the state’s industrial
power supply in supporting uninterrupted
business operations.
Plug-and-play industrial parks
8. How would you rate the industrial park
facilities in the state?
You may consider the quality, availability
of utilities, accessibility (e.g. proximity to transportation hubs), accommodation facilities and the plug-and-play usage (e.g. ease of setting up operations) to provide your response
Storage and digital infrastructure
9. How would you rate the state’s storage
infrastructure for supporting your business’s
logistics and supply chain operations?
You may consider factors such as warehouse
capacity, grade of warehousing and location,
as well as cold chain facilities and its storage
costs to provide your response
182Investment Friendliness Index
10. How would you rate the digital infrastructure
for supporting your business operations?
You may consider factors such as internet
speed, mobile coverage and overall connectivity
experience to provide your response
Investor satisfaction with investment
promotion agencies
11. How effective is the state Investment
Promotion Agency?
You may consider factors such as, whether
they are able to aid investors, responsiveness
to inquiries, clarity and accuracy of information
provided and overall support in navigating
regulatory processes to provide your response
Workforce
12. How would you rate the availability of skilled
workforce to meet your business needs?
You may consider factors such as the
ease of finding and recruiting of workers with specialised skills, qualifications, and experience relevant to your industry or sector, to provide your response
13. How would you rate the availability of unskilled
workforce in the area, to meet your business needs?
You may consider factors such as the ease of
finding and recruiting staff across blue collar workforce to provide your response.
14. How would you rate the productivity of your
workforce?
You may consider factors such as efficiency
(ability to complete tasks with minimal waste of time and resources) and the quality of work to provide your response
15. How satisfied are you with the technical skills
and industry-relevant competencies of the workforce?
You may consider factors such as technical
skills, knowledge and understanding of industry-specific concepts, and the workforce’s proficiency in specific tools, software, and technologies to provide your response. This is with reference to the managerial/white collar workforce
Quality of life
16. How would you rate your experience with the
State’s quality of life?
You may consider factors such as availability
and quality of amenities, quality of living environment, restaurants, places for entertainment, weekend getaways and access to leisure activities to provide your response
17. How would you rate the availability of diverse
and suitable job opportunities for family
members of employees?
You may consider factors such as suitable job
opportunities available for family members
18. How would you rate the law and order situation
in the State?
You may consider factors such as crime rate,
effectiveness of law enforcement agencies, response time to emergencies and public perception of safety to provide your response
Stakeholder satisfaction score with
state policies
19. How would you rate the design and
transparency of state-level investment/
industrial policy frameworks?
You may consider factors such as clarity of
rules and regulations that govern business operations, investment in the state, and transparency referring to the ease with which policies and procedures can be understood and accessed, to provide your response.
20. How would you rate the timelines of financial
incentive disbursements from the State government?
You may consider factors such as the speed
of disbursement and consistency of payment schedules to provide your response
Satisfaction with the single window
policy
21. How would you rate the ease of use of the
single window system?
You may consider factors such as clarity of
procedures, responsiveness of the system,
and overall user experience to provide your
response
Annexures 183
22. To what extent has the single window system
reduced the time taken to complete the
investment process?
You may consider factors such as the duration
of each stage of the investment process, the number of steps required, and the overall efficiency of the system in reducing processing time, to provide your response
NOCs/Permissions to start a business
23. How would you rate the ease of obtaining all
the necessary NOCs/permissions to start a business in the state?
You may consider factors such as the number
of approvals required, the clarity of application procedures, the responsiveness of authorities, and the overall time taken to obtain necessary clearances, to provide your response
24. How competitive do you think the costs
associated with obtaining licences to start a business in the state are, compared to other states?
You may consider factors such as licence
fees, registration fees, inspection fees, and other costs, including consultancy fees, documentation costs, and fees paid to agents, to provide your response
25. How would you evaluate the state’s
performance to start a business within the timeframe defined by the state
You may consider the time taken to obtain
necessary permits, ease of registration, and reliability of the process to provide your response.
Utility connections - Electricity and water
26. How would you rate the ease of obtaining
utility connections in the state, excluding environment clearance-related matters?
You may consider factors such as time taken
to obtain connections and responsiveness of utility providers to provide your response
Land allotment and use
27. How would you rate the overall experience of
obtaining land allotment in the state?
You may consider factors such as speed,
clarity, transparency, and investor-friendliness of the process, statutory costs and associated costs to provide your response.
Statutory costs (fees and charges mandated
by the government, such as registration fees, stamp duty, and other official charges)
Associated costs (additional expenses, such
as agent fees, documentation costs and other incidental charges)
28. How would you rate the overall quality of the
state’s land use change approval process?
You may consider number of procedures
involved , time taken for approvals and availability of online application systems to provide your response
Environmental clearance
29. How would you rate the efficiency of the state’s
environmental clearance process for setting up business operations
You may consider the time taken for clearance
to provide your response
30. What is the overall experience of businesses
in obtaining environmental clearance and complying with regulations in the state?
You may consider how cumbersome the entire
procedure is in terms of the documentation, associated costs (statutory and others) to provide your response
Ease of exit
Closing the operations of a plant/company in any state
31. How effective is the state’s regulatory
framework in allowing businesses to cease operations in a smooth and timely manner?
You may consider clarity of regulations, time
taken to complete closure procedures and administrative complexity involved in closing the operations of a plant/company in the state
32. How reasonable do you think the costs
associated with closing a business are in the state?
You may consider regulatory costs such as
statutory fees, legal and associated costs
184Investment Friendliness Index
(additional expenses, such as agent fees,
documentation costs, and other incidental
charges), and any penalties associated with
business closure
Construction permits
33. How is the complexity and transparency of the
state’s construction permit process?
You may consider number of procedures
involved, time taken for approvals and availability of online application systems to provide your response
Ease of contract enforcement and
access to dedicated commercial courts
34. How would you rate the accessibility of
the state’s commercial courts for resolving
commercial contract related disputes?
You may consider procedural simplicity as
well as availability of digital filing systems to assess accessibility of the commercial courts
35. How would you rate the overall effectiveness
of the legal system in enforcing commercial contracts in the state?
You may consider timeliness and reliability
of the legal system in its ability to enforce commercial contracts only. Scoring should not cover aspects related to labour disputes and tax disputes
Severity of labour disruptions
36. How would you rate the impact of labour
disruptions such as strikes on the operational stability and productivity of businesses in the state
You may consider the frequency and duration
of labour disruptions, such as strikes, and their effect on operational stability, productivity, and overall business continuity to provide your response
37. How would you rate the ease of complying
with existing labour laws and regulations in the state?
You may consider clarity of labour regulations,
ease in meeting the labour laws, administrative burden and extent of support offered by state authorities in resolving labour disputes
Regulatory environment
38. What is your experience with the regulatory
environment in the state, including the role of factory inspectors and other government agencies?
You may consider the frequency of inspections
and ease of compliance to provide your response
Consistency in state policies
39. How would you rate the consistency and
stability of the state’s policies and regulations in supporting predictable and reliable business operations
You may consider the frequency of changes
and enforcement consistency to provide your response
Grievance redressal mechanism in the
state
40. How would you rate the state’s grievance
redressal mechanism in addressing business-
related complaints or disputes?
You may consider effectiveness of the
grievance redressal mechanism of the state and the time taken in settling grievances
Disaster preparedness of the State
41. How would you rate the disaster preparedness of the State towards natural or manmade disasters?
You may consider the State’s ability to identify
risks/disasters, communicate with businesses and stakeholders and mitigate them, ensuring business continuity to assess disaster preparedness
Annexures
185
Notes
186Investment Friendliness Index
Notes
187Investment
Friendliness
Index
188Investment Friendliness Index