CHENNAI: Tamil Nadu has emerged as the third most investment-friendly state in NITI Aayog’s Investment Friendliness Index, scoring 53.3 out of 100, behind Gujarat (56.6) and Maharashtra (53.7).The state’s performance was driven by strong scores in infrastructure and business climate, while financial health emerged as a key area requiring improvement. NITI Aayog credited Tamil Nadu’s efficient port infrastructure, reliable power supply, favourable business environment and robust export performance as key factors behind its investment attractiveness.The state’s business climate received high marks from investors surveyed for the report, supported by the second-highest number of Atal Tinkering Labs (ATLs) in the country, a near-100% conversion rate of investment MoUs into projects and consistency in policy implementation. “The state has a well-structured investor facilitation framework, including the Biz Buddy and Guidance Tamil Nadu investor facilitation portal, which provide a fully digital, time-bound and closely monitored grievance redressal system, with issues typically resolved within 30 days,” the report said.Tamil Nadu ranked third nationally in weighted port turnaround time and recorded electricity downtime and transmission losses below the average for large states. “TN is also excelling in export performance, with its export-to-GSDP ratio 36% higher than the category average,” the report added.It also highlighted Tamil Nadu’s extensive road and rail connectivity linking industrial clusters such as Chennai, Coimbatore and Hosur to major ports, a renewable energy-backed power system supporting industrial demand, well-developed SIPCOT and SIDCO industrial parks, and a large pool of skilled talent. However, financial health remains the state’s weakest pillar. Interest payments account for 3.4% of GSDP, while outstanding liabilities stand at around 31% of GSDP, weighing on its overall score.Investors also flagged operational bottlenecks that could affect future investments, including limited capacity at container freight stations and inland container depots, the need to improve Chennai airport’s international connectivity, and challenges in ensuring industrial water availability, particularly in water-stressed and rain-shadow regions.The report also identified congestion around Chennai Port as a major logistics challenge, with truck turnaround times reportedly extending up to 36 hours, increasing supply chain inefficiencies and logistics costs.The Investment Friendliness Index, which assesses states using 953 indicators across eight pillars and incorporates feedback from more than 1,850 investors, identifies Gujarat, Maharashtra, Tamil Nadu, Goa and Odisha as the country’s top-performing investment destinations.
