Investment Friendliness Index (IFI) 2026
The Investment Friendliness Index (IFI) 2026, released by NITI Aayog, is India’s first comprehensive framework to evaluate how effectively States and Union Territories attract, facilitate, and sustain domestic as well as foreign investments. The index marks a significant shift from earlier ease-of-doing-business assessments by adopting an indigenous, data-driven methodology that measures the actual investment climate across the country.
Designed to support the vision of Viksit Bharat 2047, the IFI promotes competitive and cooperative federalism by encouraging states to improve governance, infrastructure, business reforms, and investor confidence.
For UPSC aspirants, the IFI is an important topic under Indian Economy, Governance, Cooperative Federalism, Public Policy, and Economic Development.
Why is the Investment Friendliness Index (IFI) 2026 in the News?
NITI Aayog has released the first-ever Investment Friendliness Index (IFI) 2026, providing a nationwide assessment of the investment readiness of 28 States and 8 Union Territories.
The report identifies strengths and areas for improvement in state-level investment ecosystems while encouraging healthy competition to attract greater domestic and foreign investment.
What is the Investment Friendliness Index (IFI)?
The Investment Friendliness Index (IFI) is a national benchmarking framework developed by NITI Aayog to evaluate the investment ecosystem of Indian States and Union Territories.
Its primary objective is to measure how effectively governments create an environment conducive to investment, industrial growth, innovation, and business expansion.
The index serves as a policy tool for improving governance and enhancing India’s investment competitiveness.
Origin and Purpose
The Investment Friendliness Index was:
- Recommended during the 9th Governing Council Meeting of NITI Aayog in 2024.
- Formally introduced as a strategic reform initiative in the Union Budget 2025–26.
- Developed to align with the vision of Viksit Bharat 2047.
The index seeks to strengthen economic growth through evidence-based policy reforms and improved state-level governance.
Methodology of the IFI
Unlike the discontinued World Bank Ease of Doing Business rankings, the IFI follows an indigenous and data-driven methodology.
The assessment combines:
- 84 objective indicators
- Investor perception surveys
- Secondary government data
- Primary feedback from investors
This approach ensures a more realistic evaluation of the investment climate across states and union territories.
Eight Pillars of Evaluation
The IFI evaluates the investment ecosystem using eight core pillars, which together determine a composite score out of 100.
The framework measures factors such as:
- Governance and regulatory environment
- Infrastructure
- Industrial ecosystem
- Fiscal management
- Innovation
- Business facilitation
- Human capital
- Investment promotion and sustainability
These pillars collectively assess the overall readiness of states to attract long-term investments.
Key Findings of the IFI 2026
Overall Top Performers
| Rank | State | Score |
|---|---|---|
| 1 | Gujarat | 56.6 |
| 2 | Maharashtra | 53.7 |
| 3 | Tamil Nadu | 53.3 |
| 4 | Goa | 53.1 |
| 5 | Odisha | 52.4 |
Category-wise Leaders
Large States
- Gujarat
- Maharashtra
- Tamil Nadu
Hilly and North-Eastern States
- Uttarakhand
- Assam
- Himachal Pradesh
Union Territories and City States
- Delhi
- Chandigarh
Why Gujarat Ranked First
Gujarat secured the top position due to several structural strengths:
- Lowest Fiscal Deficit-to-GSDP ratio (2.81%)
- Reliable and competitive electricity sector
- Around 31% of India’s manufacturing exports
- Efficient port infrastructure
- Faster cargo turnaround times
- Strong industrial ecosystem
These factors have created a stable and investor-friendly business environment.
Why Maharashtra Performed Well
Maharashtra emerged as one of India’s leading investment destinations because of:
- Highest share of Private Equity (PE) and Venture Capital (VC) investments (around 35% of the national total)
- Largest number of Atal Tinkering Labs
- Robust startup ecosystem
- Strong financial services sector
- Advanced industrial infrastructure
These features make Maharashtra one of India’s most attractive destinations for innovation and investment.
Importance of the IFI
The Investment Friendliness Index is expected to:
- Promote competitive federalism.
- Encourage policy reforms.
- Improve investor confidence.
- Increase domestic and foreign investments.
- Enhance industrial competitiveness.
- Generate employment opportunities.
- Support sustainable economic growth.
- Strengthen ease of doing business through measurable outcomes.
Significance for Viksit Bharat 2047
The IFI contributes to the Viksit Bharat 2047 vision by:
- Encouraging evidence-based governance.
- Supporting balanced regional development.
- Improving investment competitiveness.
- Strengthening state-level reforms.
- Accelerating economic transformation.
The index also enables governments to identify policy gaps and implement targeted improvements.
UPSC Prelims Quick Facts
| Topic | Fact |
|---|---|
| Index | Investment Friendliness Index (IFI) 2026 |
| Released By | NITI Aayog |
| Coverage | 28 States and 8 Union Territories |
| Total Indicators | 84 |
| Method | Secondary data + Investor perception surveys |
| Objective | Assess investment readiness |
| Top State | Gujarat |
| Second | Maharashtra |
| Third | Tamil Nadu |
| Policy Vision | Viksit Bharat 2047 |
UPSC Mains Perspective
GS Paper III
- Indian Economy
- Investment Promotion
- Industrial Development
- Cooperative Federalism
- Ease of Doing Business
- Public Policy Reforms
Governance
- Competitive Federalism
- State Capacity
- Regulatory Reforms
- Economic Governance
Conclusion
The Investment Friendliness Index (IFI) 2026 marks a major step towards building a more transparent, competitive, and investment-oriented economy in India. By evaluating states through a comprehensive set of objective indicators and investor feedback, the index provides a realistic assessment of the country’s investment ecosystem. It encourages states to improve governance, infrastructure, and policy implementation while supporting the broader vision of Viksit Bharat 2047. For UPSC aspirants, the IFI is an important topic under Indian Economy, Governance, Cooperative Federalism, Ease of Doing Business, and Economic Development, making it relevant for both Prelims and GS Paper III (Mains).
Frequently Asked Questions (FAQs) About NITI Aayog's Investment Friendliness Index (IFI) 2026
What is the Investment Friendliness Index (IFI) 2026?
The Investment Friendliness Index (IFI) 2026 is India’s first comprehensive index released by NITI Aayog to assess how effectively States and Union Territories attract, facilitate, and sustain domestic and foreign investments. It benchmarks the investment ecosystem across the country using objective indicators and investor feedback.
Why was the Investment Friendliness Index introduced?
The IFI was introduced to promote competitive and cooperative federalism, improve the ease of doing business, encourage policy reforms, and support the vision of Viksit Bharat 2047 by helping states create a more investment-friendly environment.
How is the Investment Friendliness Index prepared?
The IFI evaluates 28 States and 8 Union Territories using a composite score out of 100, based on 84 objective indicators and investor perception surveys. It adopts a data-driven methodology that goes beyond the discontinued World Bank Ease of Doing Business rankings.
Which states topped the Investment Friendliness Index 2026?
In the Investment Friendliness Index 2026, Gujarat secured the first rank, followed by Maharashtra, Tamil Nadu, Goa, and Odisha. Among hilly and North-Eastern states, Uttarakhand ranked highest, while Delhi and Chandigarh led among Union Territories and city states.
