State governments are accelerating deregulation and ease-of-doing-business reforms with over three-fourths of the Centre's first-phase compliance reduction measures already implemented. According to Business Standard, states undertook the first round of reforms in 23 specific areas flagged by the Task Force on Compliance Reduction and Deregulation, set up in January last year under Cabinet Secretary T V Somanathan. The reforms translate into close to 830 specific steps to be taken by states, with more than three-fourths achieved as of January this year. The progress is tracked digitally in real time by 12 Union secretaries to identify bottlenecks and share best practices among states.
India's investment hierarchy has undergone a dramatic transformation over the past three years. According to data from tracking firm Projects Today, fresh investments announced nationwide swelled from ₹35.2 trillion in FY24 to ₹58.3 trillion in FY26 — representing a rise of nearly two-thirds. The private sector dominated this growth, with about seven of every ten rupees announced in FY26 coming from private promoters rather than state investments. Public investment has concentrated on transport and urban transit infrastructure, while private capital targets high-growth sectors including renewable energy, green hydrogen, semiconductors, and data centres.
Several states have successfully challenged the traditional investment hierarchy while implementing significant reforms. Andhra Pradesh surged from ninth position in FY24 with ₹1.06 trillion to second in FY26 with ₹8.95 trillion, trailing only Maharashtra's record ₹11.05 trillion haul. Rajasthan climbed from eighth in FY24 to third in FY26, with investment announcements more than quadrupling in FY25 and growing another 14.2% in FY26. Madhya Pradesh moved from tenth in FY24 to seventh in FY25, while Tamil Nadu dropped out of the top 10 in FY25 before returning to tenth in FY26. Despite this competition, the top 10 states still dominate with up to 73.7% of all projects and 80-82% of total investment value over the three-year period.
State governments are implementing significant policy reforms to attract investment through deregulation. Chhattisgarh has passed the Ease of Doing Business Act, 2026, introducing a risk-based regime allowing low-risk enterprises to rely on self-certification and deemed approvals. Karnataka's Decriminalisation (Amendment of Provisions) Act, 2025, removed criminal penalties from 278 provisions in 13 pieces of legislation, while the state has set up a single-window system for clearances in partnership with Microsoft. Maharashtra's Jan Vishwas Act, 2025, decriminalised and rationalised penalties for minor offences and launched the MIDC Industrial Land Application & Allotment Portal. The reforms cover five broad areas — land, building and construction, labour, utilities, and permissions and include simplifying factory licence approvals, removing women's prohibitions from certain industries, and allowing night-time employment for women.
The investment landscape reflects a fundamental shift in India's industrial geography, with states now competing on regulatory efficiency rather than just incentives. As reported by Business Standard, Andhra Pradesh's finance minister Payyavula Keshav stated in the FY27 Budget speech that the state now talks about 'Speed of Doing Business' instead of Ease of Doing Business. Industry experts note that the greater competition among states is helping diversify business investment and creating demonstration effects that encourage other states to improve their investment environments. Rishi Shah from Grant Thornton Bharat emphasized that states recognize that regulatory efficiency, faster decision making and policy predictability are becoming as important as fiscal incentives in attracting investment. However, the data suggests that while headline announcements show dynamism, ground-level execution remains a challenge across all states, with even front-runners having significant work to do before their ecosystems become truly investor-friendly.
