Gujarat tops NITI Aayog’s Investment Friendliness Index: From ports to semiconductors, read how it became the first choice of investors

When an industrialist in the country decides to invest ₹500 crore or ₹5,000 crore, the biggest question for him is not just where to get cheaper land or where to get more tax concessions. He first asks one thing: if I invest money in this state, will my factory be built on time? Will the government work with me like a partner, or will I have to scramble for months amidst piles of files? How close is the port? Will electricity be available 24 hours a day? Will goods reach the country and abroad quickly? And most importantly, will the policies that are in place today still be trusted after five years? These questions seem very common on paper, but the decision on which country or state billions of dollars of investment will go to around the world is often based on the answers to such questions. In the investment world, there is a common belief that companies look at the attitude of a government before they look at the map. Geography matters, but governance matters even more. In India, too, there has been a competition between states to attract investment for years. Some states offer cheap land, some announce tax breaks, some create special economic zones, while others organise grand summits inviting industrialists from all over the world. But amidst all this, one question has never been systematically answered: which is the most favourable state from the investor’s perspective? NITI Aayog has now attempted to answer that question by releasing India’s first-ever Investment Friendliness Index, which evaluates all states and Union Territories on a common set of parameters. All the states and union territories of the country were tested on the same criteria, not only government claims but also the experience of investors were given importance, and in the results that came out, Gujarat emerged as the most investment-friendly state in the country. Maharashtra came second, and Tamil Nadu came third.  While the headline may simply read “Gujarat ranks first”, the significance of the report goes much deeper. Because this is not a general ranking, not an award from any media house and not an assessment from any department. This is an effort in which the government has tried to understand for the first time that if an investor comes to India with his money, which state gives him the most confidence. And when the answer to this question comes to Gujarat, it is not just the work of a year behind it. Behind it is a strategy that has been going on for years, the impact of which is often not immediately visible to the common man. This index is not just for ranking; it is for India’s future India is today one of the fastest-growing major economies in the world. There is constant talk of making India a major hub for manufacturing, exports and global supply chains in the next two decades. But mere expression of desire does not bring investment. The world’s big companies no longer look only at cheap labour. They look at policy stability, legal clarity, infrastructure, skilled manpower, power, water, ports, logistics and the speed of government decision-making, all of these together. NITI Aayog has also emphasised this in its report. The goal of making India a developed nation by 2047 cannot be achieved by the central government alone. Ultimately, industries are set up in the states, employment is created in the states, and the biggest impact of investment also falls on the states. Therefore, if India is to be made a global investment hub, it becomes necessary to measure how ready each state is.  This idea was not born in a day. In July 2024, in the Governing Council meeting of NITI Aayog, Prime Minister Narendra Modi had stressed the need to create an investment-friendly framework for states. Then, it was officially announced in the Union Budget 2025-26, and finally, this index was prepared. Its purpose was not just to give numbers to states, but to encourage them to learn from each other and become better.  This is why this index should be seen as more of a ‘roadmap’ than a simple ranking. What does the investor ultimately see? Imagine a German automobile company planning to build a manufacturing plant in India. Or a semiconductor company from Japan, Taiwan or the United States considering an investment worth thousands of crores. What will it do? First, it will look at the market. Then it will check the availability of raw materials. Then it will evaluate the government policies. It will want to know how long it takes to get approvals, how transparent the environmental processes are, how reliable the electricity and water supply is, what the law and order situation is, and if the government changes tomorrow, will there not be a major change in the policies, right? NITI Aayog attempted to convert these concerns into measurable indicators. A total of 84 indicators have been divided into eight major pillars. From infrastructure to institutional structure, business climate to financial health and environmental resilience, all issues have been taken into account. Not only this, instead of relying only on the claims of governments, an investor perception survey was also conducted, so that the difference between what is written on paper and what is experienced on the ground can also be revealed.  This is where the story of Gujarat begins. Because Gujarat’s success did not come from any single plan. It is the result of a series of decisions, one after the other, which gradually made the state not only industrial, but also a trustworthy state for investors. Gujarat’s greatest strength is not roads or ports; it is trust Gujarat has always enjoyed certain geographical advantages, including a long coastline and strategic access to ports. But geography alone does not automatically transform a state into an industrial powerhouse. Many other states also possess ports and industrial land. But because it only has land, global companies do not invest crores of rupees. The question was whether the state could convert its geographical strength into policy strength. Gujarat has probably done this most successfully in the last two decades. When Vibrant Gujarat was launched during the time of then CM Narendra Modi, many people considered it just a grand conference of investors. But over time, it became clear that its purpose was not just to get MoUs signed. Its real purpose was to send a message to the world that Gujarat is ready for investment, the government is ready to listen to you, and there will be no delay in taking decisions. This was a message. But a message alone doesn’t work. A system has to be built behind it. And perhaps from here Gujarat chose a different path from many other states. Not policies, but a strategy to create a complete ecosystem If we analyse Gujarat’s industrial journey, one thing is clear: the state has never relied on just one big project. Instead, it has gradually created an ecosystem where almost everything an investor needs complements each other. If a company has land available but no electricity, investment will stall. If there is electricity but no good road to reach the port, production will become expensive. If there is a port but government approvals take years, the company will choose another state. That is why Gujarat has not pursued different projects separately, but as part of a single development model. That is why today, if we look at the map of Gujarat, we see not just cities, but interconnected economic centres. Ports like Kandla and Mundra have become the gateways to the country’s trade. The Delhi-Mumbai Industrial Corridor directly connects the state with North India. Dedicated freight corridors speed up freight transport.  New industrial cities like Dholera are coming up, keeping in mind the needs of the future. Sanand is becoming a hub for new industries ranging from automobiles to semiconductors. If you look at all these projects separately, their impact may not seem that big, but when all these are connected to each other, Gujarat emerges as a complete investment ecosystem. Perhaps this is why NITI Aayog has not limited infrastructure to roads and bridges. The report clearly states that institutional capacity and policy stability are as important as physical facilities for investment. That is why this index has given equal importance to pillars like business climate, governance, resources and institutional environment along with infrastructure.  Gujarat not only invited industries, but it also gave confidence to industries Many states in India invite investors. They hold big summits, announce MoUs worth thousands of crores and even announce tax concessions. But investors are not just influenced by advertisements. They have watched the behaviour of the state for years. The biggest capital for an industrialist is not money, but time. If there is a delay of two years in starting a plant, there can be a loss of thousands of crores. That is why for companies around the world, ‘Ease of Doing Business’ means not just a certificate, but their real experience with every department of the government. Gujarat has carved out a distinct identity for itself here. Over the years, the state has tried to simplify approval processes. The single-window system, time-bound clearances, digital processes and the proactive role of the industry department have sent a message that the government is not just a regulator, but also a development partner. This issue has also been given importance by the NITI Aayog. The report has clarified that policy transparency for investors, speed of decision-making and an easy coordination process with the government are among the most important factors for investment. Perhaps this is the reason why when a new global company thinks of coming to India, Gujarat’s name keeps coming up first in the discussion. Preparations for what is seen today began years ago Today, Gujarat talks about semiconductors. Brings a special policy for data centres. Is ahead in green hydrogen, green energy, shipbuilding and high-tech manufacturing. But all this did not start suddenly. If we look at the journey of two decades, it is clear that the state has kept changing its priorities with time. There was a time when the goal was to strengthen the textile, chemical and petrochemical industries. Then the focus shifted to the automobile sector. Then pharma and engineering. Now the world is moving towards semiconductors, artificial intelligence (AI), data centres and green manufacturing; Gujarat is also taking its policies in the same direction. This constant change is perhaps Gujarat’s greatest speciality. While many states are busy saving old industries, Gujarat has already started preparing for where the industries of the next decade will be. A recent example is the semiconductor sector. As India talks about becoming self-reliant in this sector, Gujarat is at the centre of several major semiconductor projects approved in the country. Similarly, through the data centre policy, the state has also started preparing itself for the next phase of the digital economy. Seeing all this, one thing is clear: Gujarat is not only competing for today’s investment, but is also securing its place for tomorrow’s investment. But where is the true test of this success? Any government can make claims about its development. It can also announce big projects. However, the real test comes when an independent institution evaluates every state using common benchmarks. That is what makes NITI Aayog’s Investment Friendliness Index significant. This first Investment Friendliness Index of NITI Aayog is the test, and Gujarat’s first position in it shows that the development model adopted by the state in the last two decades was not only sufficient to create projects, but was also successful in continuously strengthening the confidence of investors. What about ordinary Gujaratis? Often, when such reports come out, the common man wonders, what is the benefit to me if the state comes first? If investors come, industrialists will benefit, the government will celebrate its achievements, but what will change in the lives of the common citizen? In fact, the entire economy of investment is such that its biggest impact is on the common man. Imagine a company setting up a plant worth ₹10,000 crore in Gujarat. The news will be that an investment of that many crores has been made. But the real success starts after that. Before the plant is set up, thousands of people get jobs in construction. Then the businesses of those who bring machinery, transporters, warehouse operators, local suppliers, small and big contractors and nearby traders all get a boost. After the plant starts up, not only is direct employment provided, but dozens of small industries associated with it are also set up. An entire economy gradually develops around a large industry. New residential settlements are built. Schools, hospitals, hotels, restaurants, banks and other services develop. That is why economists do not consider large investments as just investments of one company, but as the engine of development of the entire area. Perhaps this is why the NITI Aayog report directly links investment not just to setting up industries, but to employment, production, exports, productivity and long-term economic prosperity. The report clearly states that a better investment climate enhances the economic potential of the entire state.  But coming first is not the ultimate goal. This first place is a matter of pride for Gujarat, but perhaps an even bigger thing is that now the eyes of the entire country will be on Gujarat. Because this index is not a document that can be created once and then closed.  The clear objective of the NITI Aayog is that this evaluation should be done periodically, healthy competition between states should increase, and each state should learn good things from other states. So in the coming years, Maharashtra, Tamil Nadu, Karnataka, Uttar Pradesh, and other states will also reform their policies. The competition will become tougher. So the challenge for Gujarat now is not to get the first place, but to maintain it. Because in the world of investment, current efficiency is more important than past achievements. The state that is ahead today, if it stops improving, may also be left behind tomorrow. Big companies in the world are constantly comparing.  They compare India not only among the states of India, but also with countries like Vietnam, Indonesia, Malaysia, Mexico and Eastern Europe. So for Gujarat, the competition is no longer just within the country. The real competition is at the global level. One thing, which is perhaps the most important message of this discussion One thing is repeatedly understood while reading this index. Niti Aayog has never said that investment will come just by providing cheap land. Nor has it ever said that the state will move forward just by providing tax relief. Instead, a consistent idea throughout the report is that investment comes when the entire ecosystem inspires confidence in investors. That means good policies, strong infrastructure, fast decision-making, transparency, and a clear direction for the future.  Perhaps this is why Gujarat’s success cannot be seen as the achievement of just one department or one government. This result is a reflection of a model that has been built over many years, in which ports, roads, industrial corridors, policies, constant dialogue with investors, readiness for new technologies and the efficiency of governance have complemented each other. Not just first place, a test of the development model In India, the discussion of development often gets bogged down in political claims and counter-claims. When a government takes credit for itself, the opposition criticises it. But there are occasions when the discussion is not based on political statements, but on a systematic assessment. NITI Aayog’s first Investment Friendliness Index is one such occasion. This index does not say that Gujarat has no problems or that there is no need for improvement. On the contrary, its purpose is to encourage states to continuously improve. But it does show that Gujarat currently stands ahead of all other states when it comes to various factors required to attract investors.  (This article is a translation of the original article published on OpIndia Gujarati.)