- Why in news
- On 17 July 2026, NITI Aayog released its report "Investment Friendliness Index", which benchmarks how well States and UTs attract investment.
- What it is
- The Investment Friendliness Index (IFI) is a NITI Aayog framework to compare the investment climate of States and Union Territories. It follows the Union Budget 2025-26 announcement and a task given at the 9th Governing Council Meeting in July 2024. It aims to promote competitive and cooperative federalism through State-level reforms.
- Coverage and pillars
- It covers 28 States and 8 UTs across eight pillars, including infrastructure, regulatory ease and environmental resilience.
- Indicators and data
- The framework has 84 indicators, using secondary data and an investor perception survey.
- Categories
- Top Performers score above 50; Frontrunners 45-50; Emerging Performers 40 to below 45; Aspiring States below 40.
- Top Performers
- Gujarat, Maharashtra, Tamil Nadu, Goa and Odisha are Top Performers.
- Peer groups
- Uttarakhand tops Hilly and North-Eastern States; Goa tops City States and UTs; Gujarat tops Large States.
Don’t confuse with IFI vs Ease of Doing Business: The World Bank's Ease of Doing Business ranking was global, and discontinued in 2021. IFI is a NITI Aayog index for States and UTs.
Don’t confuse with IFI vs State Business Reform Action Plan: BRAP ranking is run by DPIIT and assesses States on reform implementation; IFI is by NITI Aayog.
Reports and indices: 14 Prelims questions since 2013; they test who publishes a report and what it measures.
Why it matters
- Encourages competitive and cooperative federalism by benchmarking States on investment climate.
- Gives investors comparable data and States clear reform priorities.
Problems
- Perception surveys and composite scores can be subjective and sensitive to indicator weights.
- Wide gaps in land, infrastructure and capacity may keep Aspiring States behind despite reforms.
Way forward
- Repeat the Index regularly and publish methodology and data openly.
- Support lagging States with capacity building, infrastructure funding and peer learning.
Put in your answer
Peer-group approach: Assessing Large States, Hilly and North-Eastern States, and UTs separately accounts for differences in geography, scale and administration.
- 2025Mains GS3 · Q11How Fiscal Health Index can assess state fiscal performance and encourage prudent policies
- 2024Mains GS2 · Q13Recent Union changes in Centre-State relations and measures to build trust
- 2016Mains ESSAY · Q1Whether cooperative federalism is a myth or a reality
- 2026Prelims Q100Statements on NITI Aayog's Multidimensional Poverty Index indicators and methodology
UPSC’s own questions that come close to this issue, from our Prelims and Mains banks.
Prelims practice · Statements
Ours, not from a UPSC paper
Consider the following statements:
- 1.The Investment Friendliness Index released by NITI Aayog covers all 28 States and 8 Union Territories.
- 2.The Index uses 84 indicators, combining secondary data with a primary survey of investors.
- 3.States scoring above 45 are classed as Top Performers in the Index.
Which of the statements given above is/are correct?
True or false?
1 of 7
Statements the way Prelims prints them. Say first, then see the fact.
1.The Investment Friendliness Index covers all 28 States and 8 Union Territories.
True. It covers 28 States and 8 UTs.
2.The Index uses 84 indicators, combining secondary data with an investor perception survey.
True. 84 indicators, with secondary data and a primary investor survey.
3.The announcement to develop the Index was made in the Union Budget 2025-26.
True. Union Budget 2025-26 announced it.
4.States scoring above 45 are classed as Top Performers.
False. Top Performers score above 50; 45-50 are Frontrunners.
5.Among the Hilly and North-Eastern States, Assam ranked first.
False. Uttarakhand ranked first; Assam was second.
6.The Index evaluates States on six pillars.
False. It uses eight pillars.
7.Goa was the top-ranked entity among City States and Union Territories, ahead of Delhi and Chandigarh.
True. Goa first, then Delhi and Chandigarh.
Written by us from the release, not by UPSC; checked by a second model.
Mains practice
10 marks · 150 words
NITI Aayog has released the Investment Friendliness Index, which benchmarks States and Union Territories on their investment climate across eight pillars. Examine how such an index can promote competitive and cooperative federalism, and discuss the challenges in using it to improve State-level investment ecosystems.
Worth revising until Prelims 2028: most news questions come within two years of the event.