NITI Aayog Vice President Dr Ashok Kumar Lahiri releases the report on “Ease of Investment Index” at NITI Aayog in New Delhi on Friday. (PIB Photo Gallery/ANI Photo) | Photo credit: ANI
Tamil Nadu has emerged as one of the best-performing states in India in translating investment commitments into actual projects, with a memorandum of understanding (MoU) conversion rate close to 100 per cent, according to NITI Aayog’s State Investment Friendliness Index report.
The report is intended to serve as a guiding document for the domestic and global investment 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 strong infrastructure, business-friendly environment, efficient port operations, high MoU conversion rate and export performance. TN’s high score was also helped by the second largest number of Atal Tinkering Labs (ATL) in the country.
In comparison, Gujarat topped the rankings thanks to its efficient ports, reliable power sector and favorable business climate. Maharashtra followed close behind, driven by its ability to attract large private equity and venture capital investments and by having the largest number of ATLs.
Exports
Tamil Nadu also stood out for its export performance, with a ratio of exports to GDPD 36% 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, third best port response time (capacity weighted), power supply downtime 4% lower than the average for large States and transmission and distribution losses around 3% lower than the average.
Policy formulation
The State also recorded strong performance in the government policy pillar, with high stakeholder satisfaction in policy formulation and implementation. It performed well in environmental resilience, recording an air quality index 22 percent better than the category average and receiving favorable comments on disaster preparedness.
However, the report noted that Tamil Nadu’s financial health score was marginally below average due to interest payments amounting to 3.4 per cent of the GSDP and outstanding liabilities equal to 31 per cent of the GSDP.
Logistics
Among the state’s key strengths are excellent road connectivity linking industrial centres, a dense railway network, a reliable power grid supported by wind and solar energy and well-developed SIPCOT and SIDCO industrial parks.
However, the report says Tamil Nadu’s logistics infrastructure could be strengthened, with the capacity of container loading stations and inland container depots about 33 per cent below the average of large states relative to their manufacturing output.
Congestion around the Chennai port, where trucks can face waiting times of up to 36 hours to enter and exit the port, was also noted as a challenge.
Chennai Airport
He recommended expanding the international connectivity of Chennai airport, pointing out that the city has relatively few direct flights to Europe despite hosting several European multinational companies. He also pointed out problems related to the availability of water for industrial use in parts of the state, particularly in landlocked and rain shadow regions.
Posted on July 18, 2026