Top 7 States for Investment in India: Findings from the Business Reforms Action Plan 2020

Posted by Written by Melissa Cyrill Reading Time: 3 minutes

The top 7 states in India based on ease of doing business parameters are Andhra Pradesh, Gujarat, Haryana, Karnataka, Punjab, Telangana, and Tamil Nadu as per the Business Reform Action Plan (BRAP) 2020 report released by the central government on June 30. Findings in this fifth edition of the report are completely based on multilingual feedback from users at ground level. Andhra Pradesh (1) and Telangana (3) featured among the top performing states in the 2019 BRAP report as well. Such reports can thus provide foreign investors with trackable data and showcase the consistency of respective states on delivering on key policy measures based on proposed reforms.

The Indian government released the Business Reform Action Plan (BRAP) 2020 report on Thursday, June 30, listing the top states to do business in India. The BRAP’s performance assessment of states across 301 reform action points is based on multilingual feedback provided to the Department for Promotion of Industry and Internal Trade (DPIIT) and not on an evidence-based system.

The purpose of this BRAP exercise is to infuse a culture of learning from each other’s best practices and improve upon the business climate in each State/UT with a unified objective for India to emerge as the most favoured investment destination across the globe. – Piyush Goyal, Minister of Commerce and Industry

What are the top Indian states based on ease of doing business?

The BRAP 2020 report groups Indian states into four categories based on their implementation of ease of doing business reforms.

  1. Top Achievers category: Andhra Pradesh, Gujarat, Haryana, Karnataka, Punjab, Tamil Nadu, and Telangana 
  2. Achievers category: Himachal Pradesh, Madhya Pradesh, Maharashtra, Odisha, Uttarakhand, and Uttar Pradesh 
  3. Aspirers category: Assam, Chhattisgarh, Goa, Jharkhand, Kerala, Rajasthan, and West Bengal 
  4. Emerging Business Ecosystems category: Andaman & Nicobar, Bihar, Chandigarh, Daman & Diu, Dadra & Nagar Haveli, Delhi, Jammu & Kashmir, Manipur, Meghalaya, Nagaland, Puducherry, and Tripura

The BRAP 2020 report includes 301 reform points covering 15 business regulatory areas, such as access to information, single window system, labor, environment, land administration and transfer of land and property, utility permits, among other criteria.

The DPIIT has assessed the ease of doing business across states since 2014; previous reports have been published in 2015, 2016, 2017-18, and 2019.

In the 2019 report, published September 2020, Andhra Pradesh had topped the rankings, followed by Uttar Pradesh, Telangana, Madhya Pradesh, and Jharkhand. 

What is new in the 2020 edition of the BRAP report?

118 new reforms were tracked in this edition of the report as state governments worked to improve the reform process.

Sector-wise reforms were tracked via 72 action points in nine sectors. Trade license, healthcare, legal metrology, cinema halls, hospitality, fire no-objection certificate (NOC), telecom, movie shooting, and tourism were introduced for the first time to expand the scope of reform agenda.

What is the goal of the report’s tracking mechanism?

The report seeks to boost investor confidence in India, foster a business friendly climate, and strengthen ease of doing business across the country by enabling states and union territories to compete on their implementation of reforms.

Previous iterations of the report ranked the states but this time a process of competitive learning of best practices has been emphasized by grouping similarly performing states into simple categories based on their status of reforms.

Why are such ‘ease of doing business’ reports relevant for foreign investors?

To build a successful India strategy, foreign companies must understand the differences between Indian states at the ground level. Such ease of doing business reports provide a trackable mechanism to judge state performance on key metrics and how reliably their reforms translate into actual policies in effect.

Instead of treating the country as a whole, it is advisable that foreign investors adopt a focused approach by comparing specific regions in India to assess whether the industrial ecosystem, logistics and infrastructure, and system of bureaucracy matches the company’s business needs and keeps operational costs competitive. This is because what works in one state in India may not necessarily work in another.

Before entering India, businesses must do the following:

  1. Conduct a detailed analysis to select the most suitable options for the proposed set-up
  2. Evaluate factors such as government stability, industrial policies, ease of doing business, and transparency
  3. Assess economic potential, market size, and operating environments in states and cities
  4. Deliberate with state industrial authorities to get a better understanding of their incentives
  5. Investigate any business competitors or local firms that can offer key market linkages for your enterprise

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