Infrastructure gaps and shortages in skilled manpower continue to constrain Nagaland’s investment climate despite improvements in regulatory reforms and institutional support, according to NITI Aayog’s latest Investment Friendliness Index, which ranked the state 27th among Indian states and Union Territories and sixth among the northeastern and hilly states.
The report gave Nagaland an overall score of 41.2, attributing its performance to strong scores in institutional environment (76%), regulatory ease (68%), environment resilience (67%) and government policy (47%). However, it identified weaknesses in the resources and infrastructure pillars, particularly in the area of human resources.
According to the report, Nagaland’s regulatory performance was driven by efficient land allotment and land use processes, environmental clearances and shorter timelines for business closure, with all three indicators scoring above the average for states in the same category.
The report also highlighted positive economic indicators, noting that Nagaland recorded a five-year Gross State Domestic Product (GSDP) growth rate of 4.84% between the 2019 and 2024 fiscal years, marginally exceeding the national average of 4.8%.
It further noted that the state achieved a capital expenditure incentive disbursement equivalent to 18% of total industrial capital expenditure, compared to the national average of 11%, while its female workforce participation rate stood at 59%, significantly higher than the national average of 40% and the category average of 13%.
Despite these strengths, NITI Aayog said infrastructure deficiencies continue to constrain the state’s investment potential. It pointed to the limited passenger capacity of Dimapur Airport, inadequate cargo-handling facilities, low rail density and weaker digital infrastructure as key challenges.
The report observed that 5G and 4G penetration in Nagaland, measured by base transceiver stations per square kilometre, is 26% lower than the average for comparable states, while per capita digital payment transactions are only half the category average, indicating scope for strengthening the state’s digital ecosystem.
Feedback gathered from stakeholders cited the state’s well-maintained road network, reliable industrial power supply, transparent industrial policy, effective investment promotion mechanism and favourable law and order situation as factors contributing to a conducive investment environment.
At the same time, respondents called for greater availability of skilled manpower through industry-oriented training programmes, improved efficiency of the state’s single-window clearance system to reduce visits to multiple government offices, and faster processing of water connections for industrial projects.
The Investment Friendliness Index assesses states and Union Territories across key parameters, including infrastructure, business climate, resources, government policy, regulatory ease, institutional environment, financial health and environmental resilience, to evaluate their readiness to attract and sustain investments.