NITI Aayog Vice Chairman Dr. Ashok Kumar Lahiri releases the report on the “Investment Friendliness Index” at NITI Aayog, in New Delhi on Friday. (PIB Photo Gallery/ANI Photo)
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ANI
Tamil Nadu has emerged as one of India’s best-performing States in translating investment commitments into actual projects, with a near-100 per cent memorandum of understanding (MoU) conversion rate, according to NITI Aayog’s Investment Friendliness Index report for States.
The report is intended to serve as a guiding document for the domestic and global investor communities.
The State ranked third overall with a score of 53.3, behind Gujarat (56.6) and Maharashtra (53.7).
The index said Tamil Nadu’s strong performance was driven by its robust infrastructure, business-friendly environment, efficient port operations, high MoU conversion rate, and export performance. TN’s high score was also aided by the second-highest number of Atal Tinkering Labs (ATLs) in the country.
In comparison, Gujarat topped the rankings on the strength of its efficient ports, reliable power sector and favourable business climate. Maharashtra followed closely, driven by its ability to attract large private equity and venture capital investments and by having the highest number of ATLs.
Exports
Tamil Nadu also stood out for its export performance with its export-to-GSDP ratio 36 per cent higher than the average for large States, reflecting the strength of its manufacturing ecosystem.
Among large States, Tamil Nadu ranked first in the infrastructure pillar, supported by efficient port infrastructure, the third-best port turnaround time (weighted by capacity), electricity downtime that is 4 per cent below the large-State average and transmission and distribution losses around 3 per cent lower than the average.
Policy formulation
The State also recorded a strong performance in the government policy pillar, with high stakeholder satisfaction on policy formulation and implementation. It performed well in environment resilience, registering an air quality index 22 per cent better than the category average and receiving favourable feedback on disaster preparedness.
However, the report noted that Tamil Nadu’s financial health score was marginally below average because of interest payments amounting to 3.4 per cent of GSDP and outstanding liabilities equivalent to 31 per cent of GSDP.
Logistics
Among the State’s key strengths are excellent road connectivity linking industrial centres, a dense rail network, a reliable power grid backed by wind and solar energy and well-developed SIPCOT and SIDCO industrial parks.
However, the report said Tamil Nadu’s logistics infrastructure could be strengthened, with container freight station and inland container depot capacity around 33 per cent below the large-State average relative to its manufacturing output.
Congestion around Chennai Port, where trucks can face waiting times of up to 36 hours to enter and exit the port, was also pointed out as a challenge.
Chennai Airport
It recommended expanding Chennai airport’s international connectivity, noting that the city has relatively few direct flights to Europe despite hosting several European multinational companies. It also flagged the issues around water availability for industrial use in parts of the State, particularly in landlocked and rain-shadow regions.
Published on July 18, 2026
