Northeast India: Ranks Third in Investment Friendliness

Shillong, India Jul 18, 2026 ALN: has emerged as the third-best state in the Northeast in terms of ‘investment friendliness’, following Assam and Tripura. This ranking is part of the inaugural Investment Friendliness Index (IFI) released by NITI Aayog, a policy think tank of the Government of India that aims to foster cooperative federalism through the involvement of State Governments in the economic policy-making process.

The Index is an important tool for assessing the investment climate across various states in India, and it seeks to provide a comprehensive overview of the factors that contribute to a favorable or unfavorable business environment. The report outlines that has earned an overall score of 43, placing it behind Assam, which topped the region with a score of 47.3, and Tripura, which secured second place with a score of 45. Both Assam and Tripura were categorized as ‘Frontrunners’, indicating their significant progress in creating a conducive atmosphere for business. In contrast, was classified as an ‘Emerging Performer’, highlighting its potential for future growth and development in investment opportunities.

Other states in the region also participated in the evaluation, with Nagaland scoring 41.2 and qualifying as an ‘Emerging Performer’. Mizoram followed with a score of 39.9, while Arunachal Pradesh, Sikkim, and Manipur scored lower at 37.5, 36.6, and 32.3, respectively. The report categorized these states as ‘Aspiring States’, which suggests that they are still in the early stages of developing their investment climates and require targeted interventions to improve their standings.

The Investment Friendliness Index evaluates eight critical parameters that contribute to a state's investment environment: infrastructure, business climate, resources, government policy, regulatory ease, institutional environment, financial health, and environmental resilience. Each of these parameters plays a crucial role in determining how attractive a state is to potential investors. For instance, strong infrastructure, including transportation and utilities, is essential for businesses to operate efficiently, while a favorable business climate can enhance investor confidence.

On a national scale, Gujarat, Maharashtra, and Tamil Nadu were identified as the top three states in terms of investment friendliness. These states have consistently demonstrated robust economic growth and have implemented policies that attract both domestic and international investments. Conversely, the Union Territory of Lakshadweep was noted as the worst performer in the index, followed closely by Ladakh and the Andaman and Nicobar Islands. This disparity highlights the varying levels of development and investment readiness across different regions of India.

The report emphasizes that while several Northeast states have made strides in enhancing regulatory frameworks and governance, the region still grapples with common challenges that hinder investment. Key issues include limited industrial infrastructure, logistics bottlenecks, connectivity constraints, and a relatively small domestic market. These challenges are particularly pertinent in the context of the Northeast, which has unique geographical and socio-economic characteristics that can complicate business operations.

For instance, the region's hilly terrain and remote locations can make transportation and logistics more difficult, leading to increased costs for businesses. Additionally, the limited scale of the domestic market can deter larger companies from investing, as they may not see sufficient demand for their products and services. Addressing these challenges is crucial for the Northeast to realize its full economic potential and attract more significant investments.

To boost investor confidence and attract greater domestic and foreign investment, the report recommends several strategic initiatives. Strengthening transport infrastructure is a critical first step, as improved connectivity can facilitate the movement of goods and services, making it easier for businesses to operate. Establishing industrial parks can also create concentrated areas for manufacturing and service industries, providing businesses with the necessary facilities and resources to thrive.

Enhancing logistics networks is another essential recommendation, as efficient logistics can reduce costs and improve the overall business environment. Improving digital governance is also highlighted, as technology can streamline processes, reduce bureaucratic hurdles, and enhance transparency, making it easier for businesses to navigate regulatory requirements.

Furthermore, refining grievance redressal systems can help address issues that investors may face, ensuring that their concerns are heard and resolved in a timely manner. Such measures can significantly enhance the overall investment climate and encourage more businesses to consider the Northeast as a viable location for their operations.

The implications of this report are significant for the economic development of the Northeast region. By focusing on improving investment friendliness, states can create jobs, stimulate local economies, and enhance the overall standard of living for residents. As the region continues to modernize and develop its infrastructure, it may become increasingly attractive to investors seeking new opportunities in India.

Moreover, the findings of the Investment Friendliness Index can serve as a roadmap for policymakers and government officials in the Northeast. By identifying strengths and weaknesses in their investment climates, states can tailor their policies and initiatives to address specific challenges and leverage existing advantages. This proactive approach can help create a more favorable environment for business growth and economic development.

In conclusion, the emergence of as the third-best state in the Northeast for investment friendliness is a positive sign for the region's economic aspirations. However, it also highlights the need for continued efforts to overcome existing challenges and create a more conducive environment for businesses. By implementing the recommended strategies and focusing on enhancing key parameters, the Northeast can position itself as a competitive player in the broader Indian economy, attracting investment and fostering sustainable growth in the years to come.