Gujarat is the top scorer on the very first edition of NITI Aayog's Investment Friendliness Index with a score of 56.6 followed by Maharashtra, with a score of 53.7 and ahead of Tamil Nadu with 53.3. It sounds like a clean sweep for the industrial machine of the western state, on paper. But pay attention to the figures; it's not the ranking but this one that should give policymakers cause for greater concern in India: none of the 28 states or eight Union Territories scored above 60. Even the top-ranked state in the nation has not passed a majority of the test in a country that aims to become a developed country by 2047 and which plans to march its economy to a five trillion dollar economy.

This is because the index was created in response to the fact that the Indian investment vernacular is frustrating. In July 2024, the Prime Minister had asked NITI Aayog to do away with the slogan of investment promotion and measure it like an engineer. The ask itself was captured in the Union Budget, 2025-26, and what came out this July is an exercise in granularity we have 84 indicators under eight pillars, which are derived from a survey of over 1,850 investors and the consultation with 165 stakeholders. Infrastructure is the biggest factor at 25 percent, followed by business climate, resources, regulatory ease, government policy, financial health and institutional environment, all of which account for 20 percent each, and environmental resilience has the lowest impact at 5 percent.

Gujarat's victory is no fluke. The industrial corridors of the state, ranging from the Dholera Special Investment Region (SIR) to the GIFT City, Sanand, Dahej, Jhagadia and Saykha, are plug-and-play spaces where a factory can be set up in months and not years. Its command of the infrastructure pillar was bolstered by having some of the lowest fiscal deficits of any major state, and its single-window clearance system. Its high debt is just 40 percent lower than the average of larger states, and is about 40 percent below the level that credit rating agencies and long-term investors actually consider “fiscally disciplined.” The state also is responsible for nearly one-third of India's merchandise exports, which is why it remains an irresistibly attractive destination for foreign manufacturers, irrespective of who is at the helm in Delhi or Gandhinagar.

However, the index was carefully designed to ensure that it did not provide a prescription for states to follow Gujarat's recipe because the geography and history of states do not permit that. NITI Aayog divided the evaluation in three groups large states, hilly states, North-East states, city states, and UTs. The business climate score was the highlight of Maharashtra's performance in the second position in the country, despite the state being recognised as having weak infrastructure and inadequate regulatory clearances. Tamil Nadu routed through infrastructure and business climate to come third, while financials were its weaker side. Mineral resources and a manufacturing push have made Odisha one of the more underrated investment stories of the past five years, as it is the fourth highest performer among the large states, with 52.4.

The state with the highest share of hilly states 47.5 % was Uttarakhand, followed in a close race by Assam and Himachal Pradesh, none of which were close to the large-state leaders but all were able to demonstrate that hilly and North-Eastern states do not need to become policy vacuums. Goa had the highest 53.1 followed by Jammu and Kashmir, Delhi and Chandigarh among city states and Union Territories. Likewise, Lakshadweep, Ladakh and Andaman and Nicobar Islands lagged behind in investment preparedness in the nation as remote geography continues to have a hard ceiling that can never be overcome by a single policy change. Bihar, Jharkhand and West Bengal were at the bottom of the list among the big states, a result that will come as a shock to all three governments, as they have been proactively holding investor summits in recent years.

NITI Aayog Vice Chairman Ashok Kumar Lahiri was quick to highlight that it is not a contest of the chief ministers and it is about learning from each other. Let's examine that framing. When indices of rankings are made available with a ranking attached, they invariably become political currency as soon as they are released and several state governments have already started issuing ‘celebratory’ press releases around the position of the index alongside the actual number. Business decision makers will find the more useful reading under the headline rank, in the pillar-level detail, where the true differentiators between states are seen. If a particular dimension of a state's operation is of critical importance to a certain industry, such as renewable energy siting, port access or flexibility in the labour market, then it could be a pillar where that state is strongest and therefore dominate the country.

It's also a wider capital story that coincides with that timing. India, however, managed to attract 58.85 billion dollars of FDI equity inflows in the previous financial year, an 18 percent increase, and technology and services corridors such as Karnataka doubled the amount without being a part of this index's top ten list of large states by inflows. The difference in FDI performance versus the rank on the Investment Friendliness Index is telling as well: sometimes capital follows talent pools and service ecosystems that this framework's infrastructure focus under-represents. The takeaway for lenders, private equity desks and mid-market manufacturers who are looking for expansion sites is that they should not consider this as gospel, but as yet another data layer, which is helpful precisely because it reveals where the policy intent and execution capacity gap still exists and where the next wave of reforms will need to be targeted if India hopes to see more than one state cross the 60-point threshold.