CHENNAI: The Investment Friendliness Index 2026, prepared by Niti Aayog, ranked Tamil Nadu first among large states on the infrastructure pillar and highlighted its deep technical talent pool, efficient ports and reliable power network as key competitive advantages. The state also secured third place overall among large states with a composite score of 53.3 out of 100, behind Gujarat (56.6) and Maharashtra (53.7).
The report said Tamil Nadu’s extensive network of engineering colleges, industrial training institutes and polytechnics has created one of the country’s strongest industrial skills ecosystems, supporting sectors ranging from the automobiles sector and electronics to advanced manufacturing.
Among the state’s key infrastructure strengths, the report noted its ports ranked third nationally on turnaround time adjusted for capacity, while electricity outages were about 4% lower than the average for large states.
Transmission and distribution losses were also around 3% below the peer-group average, reflecting the reliability of the state’s power network.
Tamil Nadu’s export-oriented industrial base was another differentiator. Its exports amounted to 36% of gross state domestic product, exceeding the average for large states, while the state also recorded the second-highest number of Atal Tinkering Labs in the country, highlighting investments in innovation and technical education.
The report also cited the state’s conversion of investment memoranda of understanding into implementation and praised its digital investor facilitation systems, including the Biz Buddy platform and the Guidance Tamil Nadu Investor Facilitation Portal, which typically resolve investor grievances within 30 days.
The report pointed to Tamil Nadu’s road and rail connectivity as another competitive strength, highlighting highway links connecting Chennai, Coimbatore and Hosur and rail networks serving the ports of Chennai, Kamarajar (Ennore) and Thoothukudi. Industrial parks developed by SIPCOT and SIDCO were described as well-planned and attractive to multinational manufacturers in the automobile and electronics sectors.
The report also cited Tamil Nadu’s electric vehicle policy as an example of a state policy that has translated into implementation on the ground, alongside Gujarat’s semiconductor policy.
Tamil Nadu was one of five states — along with Gujarat, Maharashtra, Delhi, and Karnataka — identified as accounting for around 85% of India’s foreign direct investment inflows, reinforcing its importance to the country’s industrial economy.
Tamil Nadu also ranked strongly on environmental resilience. The report said the state recorded air quality levels 22% better than the average for large states and received high perception scores from industry for its disaster preparedness, reflecting confidence in its institutional capacity to respond to natural hazards.
However, financial health emerged as Tamil Nadu’s weakest-performing pillar, with interest payments amounting to 3.4% of gross state domestic product and outstanding liabilities reaching 31% of GSDP, marginally reducing its overall score.
The report also flagged gaps in logistics infrastructure. Capacity at container freight stations and inland container depots was estimated to be around one-third below the average for comparable large states relative to manufacturing output, suggesting that logistics infrastructure has not kept pace with the state’s expanding industrial base.
