Patna: Bihar continues to face significant challenges in attracting investment, with the state’s weak performance highlighted in the NITI Aayog’s Investment-Friendly Index. The index assesses the investment climate across India’s states and Union territories, covering factors such as infrastructure, business environment, innovation, financial access and institutional conditions.
NITI Aayog released its first assessment of states’ investment readiness in July 2026, as part of efforts to evaluate the conditions required to strengthen India’s investment ecosystem.
Bihar’s Performance Raises Concerns
According to Prof Sushank Kumar, associate professor at Chanakya National Law University, Bihar’s position in the index is a matter of concern.
He said the state’s low ranking reflects structural weaknesses that have been highlighted in several earlier studies.
The report points to challenges related to innovation and MSMEs, security, land availability, employment and the broader business environment, which can influence investors’ decisions.
Innovation And MSME Indicators Remain Weak
The assessment highlights Bihar’s relatively weak position on innovation and MSME-related indicators.
According to the report, while innovation can support new businesses and investment, limitations in areas such as infrastructure, access to finance and institutional support can restrict the growth of enterprises.
Experts have also pointed to the need for Bihar to improve the conditions that allow businesses to establish and expand within the state.
Direct Foreign Investment Remains Low
The report also highlights Bihar’s low level of foreign direct investment (FDI).
In 2024-25, Bihar received only $0.16 million in FDI, according to the figures cited in the report.
By comparison, Maharashtra received $15,116 million, while Delhi recorded $6,523.43 million and Karnataka $6,571 million during the same period.
A large share of India’s total FDI was concentrated in Maharashtra, Karnataka, Gujarat, Delhi and Tamil Nadu, highlighting the considerable gap between Bihar and the country’s leading investment destinations.
Patent Filings Also Lag Behind
Bihar also remains behind several larger states in terms of patent filings.
The report states that companies in Bihar accounted for only 0.48% of total patent filings in the country in 2023, compared with an average filing rate of 3.6% among major states.
The figures indicate the need to strengthen research, innovation and intellectual-property activity within the state.
Infrastructure And Business Environment Key To Investment
The report suggests that Bihar needs to improve several areas to become more attractive to investors.
These include infrastructure, business conditions, availability of resources, government policies, regulatory ease, financial health and the institutional environment.
It also highlights the importance of improving safety and security, along with developing dedicated industrial infrastructure such as industrial parks and related facilities.
Bihar Needs A Long-Term Investment Strategy
Experts believe Bihar could improve its investment position by addressing these structural constraints through a coordinated, long-term strategy.
Improving infrastructure, encouraging innovation, strengthening MSMEs and ensuring a predictable business environment could help the state attract more domestic as well as foreign investment.
The NITI Aayog assessment provides a framework for identifying areas where states need to strengthen their investment ecosystems. For Bihar, the findings underline the need to improve the fundamentals that influence investors before the state can significantly narrow its gap with leading investment destinations.
