“The index is not a ranking exercise; it is to tell the states that there are indicators where you are doing well and parameters where you can do better.” That was how Ashok Lahiri, vice chairman of NITI Aayog, framed the government think tank’s first Investment Friendliness Index at a press briefing in New Delhi on July 17, 2026. Tamil Nadu, by the account of India Today, came out third in the country.
The Indian Express reported that the index covers all 28 states and eight union territories. It judges them on infrastructure, business climate, resources, government policy, regulatory ease, financial health, institutional environment and environmental resilience. Infrastructure carries the heaviest weight, at 25%. Gujarat, Maharashtra, Odisha, Tamil Nadu and Goa were named among the top performers. The report itself was published on July 18, according to India Today.
What the report credits
India Today said NITI Aayog put Tamil Nadu’s showing down to infrastructure, institutional capacity and steady policy. Among large states the state ranked first on infrastructure, with industrial corridors the report called the country’s most efficient, road links between Chennai, Coimbatore and Hosur, a rail network serving the automobile, textile and cement industries, and the best port turnaround times.
The figure that gives the headline its weight is the conversion rate. The report records a near-100% conversion of investment memoranda of understanding into operational projects. Signed pledges and working factories are often far apart in India, so the number stands out. The state also has the second-highest number of Atal Tinkering Labs, and its export-to-GSDP ratio is 36% higher than the average for large states. It drew $2.436 billion in foreign direct investment in FY24, and it topped the environmental resilience pillar, with air quality 22% better than the category average.
The electric vehicle policy drew particular mention as a model for attracting global manufacturers through customised incentive packages. Investor facilitation tools such as Biz Buddy and the Guidance Tamil Nadu portal, which offers time-bound grievance redressal, were also noted.
The gaps it flags
The same report is not all praise. Outstanding liabilities stand at 31% of Tamil Nadu’s GSDP, against 30.3% for large states on average, and interest payments take 3.4% of GSDP. Container Freight Station and Inland Container Depot capacity is 33% below the large-state average relative to manufacturing output. Around Chennai Port, poor roads mean trucks reportedly wait as long as 36 hours to enter or leave.
The Chennai airport, the report says, needs significant expansion, and it points to the lack of direct flights to several European destinations even though many European multinationals operate in the state. Industrial water supply is hard to secure in parts of Tamil Nadu, and treated sewage water is scarce for reuse, especially in rain-shadowed and landlocked regions.
India Today framed these gaps as a to-do list for Chief Minister C Joseph Vijay and his new TVK government.
The national picture
The Indian Express noted a lopsided pattern in the wider data. Maharashtra, Karnataka, Gujarat, Delhi and Tamil Nadu together attract 85% of total foreign direct investment inflows, while the northeastern states receive less than 1% combined. On infrastructure alone, Gujarat held the top spot, followed by Tamil Nadu and Kerala. On business climate Maharashtra led, with Karnataka and Tamil Nadu behind it.
The report also put investment at 29.9% of GDP in financial year 2025, slightly above the decadal average of 29.1%.
Sources
- Airport, sewage blocking Tamil Nadu investments. Is CM Vijay up for the challenge? – Tamil Nadu News | India Today
- Gujarat, Maharashtra & Tamil Nadu top Niti Aayog’s Investment Friendliness Index | Business News – The Indian Express
