Despite significant improvements in India’s investment climate, investors continue to face challenges related to skilled labour availability, land access and delays in regulatory approvals, according to the NITI Aayog Investment Friendliness Index 2026.
The report, prepared by NITI Aayog with CRISIL as the knowledge partner, noted that India has made substantial progress over the past five years in digital infrastructure, logistics and sector-specific incentives. However, operational bottlenecks continue to affect investment decisions across states and Union Territories.
According to the report, investors identified lengthy approval timelines, difficulties in acquiring land and shortages of skilled manpower as the most persistent barriers to investment. It stressed that addressing these issues will be critical to attracting higher domestic and foreign investments.
The report highlighted that states with efficient investor facilitation mechanisms—including robust single-window clearance systems, dedicated investor grievance redressal cells and plug-and-play industrial infrastructure—have witnessed stronger capital commitments and faster project execution. It emphasized that institutional responsiveness is as important as industrial capacity in improving investment outcomes.
The Investment Friendliness Index combines data-driven indicators with investor surveys to evaluate how effectively states and Union Territories attract, facilitate and sustain investments.
Investor feedback revealed region-specific concerns. In Jammu and Kashmir, respondents cited a shortage of skilled labour and an underperforming single-window clearance system. Investors in Dadra and Nagar Haveli and Daman and Diu also called for a streamlined single-window approval mechanism, describing the existing process as fragmented and time-consuming, while highlighting shortages of both skilled and unskilled workers.
The report identified workforce development as a key reform priority. In Haryana, it recommended increased investment in education to build a more skilled and competitive workforce. In Himachal Pradesh, it suggested targeted skill development initiatives and improvements to the single-window clearance system to address labour shortages and accelerate project approvals.
NITI Aayog said the Investment Friendliness Index is designed not only to rank states but also to help governments identify reform priorities, strengthen investment ecosystems, improve institutional effectiveness and address investor concerns, thereby enhancing India’s overall investment competitiveness.
