The Investment Friendliness Index (IFI) is a comprehensive, structured, and evidence-based macroeconomic assessment concept and framework developed by NITI Aayog to evaluate the investment ecosystems of all 28 states and 8 Union Territories in India. The IFI was mandated at the 9th Governing Council Meeting of NITI Aayog in July 2024 and formally announced in the Union Budget 2025–26. It was created to boost the investment rate and promote competitive and cooperative federalism by encouraging states to improve their business environment and attract private capital. The index solves the problem of systematically measuring which state is most favourable from an investor's perspective, a question previously lacking a common benchmark.
The mechanism works by assessing performance across 84 indicators categorised under eight pillars, which include Infrastructure, Business Climate, Regulatory Ease, and Financial Health. The evaluation framework is split into two primary dimensions: Opportunity (65% weightage) and Risk (35% weightage), with the latter covering natural, regulatory, financial, and institutional risks. The IFI uses a mix of official government data and feedback from an investor perception survey covering 1,850 investors. States are grouped into four performance bands, such as "Top Performers" (scores above 50) and "Aspiring States" (scores below 40), with peer-group comparisons made across Large States, Hilly & North-Eastern States, and Union Territories.
The IFI connects to the broader national vision of Viksit Bharat @2047 and is a conceptual successor to the discontinued World Bank's Ease of Doing Business index and the Department for Promotion of Industry and Internal Trade's (DPIIT) Business Reforms Action Plan (BRAP). The first edition of the IFI was officially launched by NITI Aayog on 17 July 2026. This launch represents a recent change, replacing the need for an external or less comprehensive domestic yardstick with a new, data-driven, and investor-outcome-focused framework.