Investment Friendliness Index for States: Parameters to be Finalized

New Delhi, Feb 2 (PTI) The Finance Ministry, in consultation with Niti Aayog and DPIIT, will soon decide on the parameters for the 'Investment Friendliness Index of States', which will aim to create healthy competition among states to allure private investments, Expenditure Secretary Manoj Govil said on Sunday.

The 2025-26 Budget announced the launching of an Investment Friendliness Index of States in 2025 to further the spirit of competitive cooperative federalism.

In an interview with PTI, Govil said while many regulations and reforms have been done at the level of the Centre, some investors feel that similar reforms are needed at the state level.

The index will nudge the states to look at the regulations to see what is holding back investments.

"The main idea is not so much to rank the states and to say who is good or bad but more to prompt the states to take a look at their own rules, regulations and procedures and to find out from them which are the ones which investors deem or find unfriendly, unworkable or difficult and how does that affect the states in getting investments," Govil said.

The timeline for the launch of the index would be decided by the Department of Economic Affairs and Niti Aayog, besides the Department for Promotion of Industry and Internal Trade (DPIIT).

Govil said all states would like more investment to come in and hence they would like to re-examine their regulations. In that spirit, the idea of this index has come in Budget.

"To make the index, we still have to select the criteria, its not cast in stone," he said.

For instance, if some states have 15 procedures for an investor wanting to set up a factory, while some have only five, the lagging states could emulate the successes achieved by their counterparts.

"More than us, it is the state governments who will have to do this exercise and find out what are the problems that the investors face," Govil added.

Currently, the DPIIT undertakes an annual exercise of ranking states and union territories in terms of ease of doing business. Also, it categorises states and UTs performance across the key pillars of Logistics Infrastructure, Logistics Services and Operating and Regulatory Environment.