01
Context / Background
NITI Aayog, replacing the Planning Commission, has been mandated to foster competitive federalism through indices. Previous indices include Ease of Doing Business, Export Preparedness, and SDG Index. The Investment Friendliness Index 2026 is the first of its kind, focusing on the entire investment lifecycle from policy to implementation.
02
Core Analysis: Gujarat's Performance
Gujarat's top ranking is attributed to policy stability, investor-centric governance, and streamlined business facilitation through the single-window clearance system (iNDEXTb). The state's time-bound framework for statutory approvals and NOCs reduces project delays. Restrictions on strikes in essential services ensure industrial peace, leading to negligible labour disruptions.
03
Infrastructure and Logistics
Gujarat's industrial hubs (Dholera SIR, GIFT City, Sanand, Dahej, Jhagadia, Saykha) offer plug-and-play facilities. The state accounts for nearly 10% of India's state highway network (four times national average) and has the highest expressway length (635 km). Lower turnaround times and efficient logistics improve supply chain competitiveness.
04
Fiscal Management and Power Sector
Gujarat's fiscal deficit of 2.81% of GSDP in 2024-25 is the lowest among all states. Outstanding liabilities are ~18% of GSDP, 40% lower than the average of major states. Industrial electricity tariffs are 29% lower than the national average, with 23.8 hours of average daily power supply, reducing operating costs.
05
Economic Contribution and Innovation Ecosystem
Gujarat contributes 31% of India's merchandise exports and recorded the third-highest GSDP growth among states during 2019-24. The state has established 614 Atal Tinkering Labs (ATLs) by FY2025, with 1.24 ATLs per lakh population (19% above average), strengthening innovation and entrepreneurship.
06
Future Outlook / Way Forward
This index will likely drive competitive federalism, pushing other states to reform policies. For UPSC, it highlights the importance of investment climate, fiscal prudence, and infrastructure in economic growth. The index may be updated periodically, and states can use it as a benchmark to attract investments.